Summary
Keysight Technologies, Inc. (KEYS) filed an 8-K on October 17, 2014, to report on significant financing activities. The company issued $1.1 billion in aggregate principal amount of senior notes, consisting of $500 million of 3.300% senior notes due October 30, 2019, and $600 million of 4.550% senior notes due October 30, 2024. These notes were issued through a private placement to qualified institutional buyers and non-U.S. persons. The net proceeds from this issuance are earmarked for a cash distribution to Agilent Technologies, Inc., its then-sole stockholder, with the remaining funds to support working capital and other liquidity needs. This financing is occurring in close proximity to the planned separation of Keysight from Agilent, scheduled for November 1, 2014, indicating a strategic financial maneuver ahead of its independent operation.
Key Highlights
- 1Keysight issued $500 million of 3.300% senior notes due 2019 and $600 million of 4.550% senior notes due 2024, totaling $1.1 billion.
- 2The notes were sold in a private placement under Rule 144A and Regulation S.
- 3Proceeds will be used for a cash distribution to Agilent Technologies and for working capital and liquidity.
- 4Agilent Technologies, as Keysight's sole stockholder at the time, guaranteed these notes.
- 5The Agilent guarantee will terminate upon Keysight's distribution to Agilent shareholders (expected November 1, 2014), Agilent losing majority voting control, or other specified events.
- 6A registration rights agreement was entered into, obligating Keysight to file for an exchange offer or shelf registration, with penalties for default (increased interest rates up to 1.00% annually).