Summary
Keysight Technologies, Inc. filed an 8-K on April 6, 2017, to report the closing of its offering of $700 million aggregate principal amount of 4.60% Senior Notes due 2027. The company entered into an underwriting agreement on March 28, 2017, and closed the offering on April 6, 2017. The net proceeds from this issuance are earmarked for a portion of the consideration for the contemplated merger with Ixia, along with associated fees and expenses. This move indicates Keysight's financing strategy for a significant acquisition, providing investors with insight into the capital structure supporting this growth initiative.
Key Highlights
- 1Keysight Technologies closed the sale of $700 million in 4.60% Senior Notes due 2027.
- 2The offering was conducted under an effective shelf registration statement on Form S-3.
- 3Net proceeds are intended to fund a portion of the consideration for the planned merger with Ixia.
- 4The Notes mature on April 6, 2027, and bear a fixed interest rate of 4.60% per annum, payable semi-annually.
- 5The company has the option to redeem the Notes, with specific terms and pricing outlined for redemptions prior to and after January 6, 2027.
- 6The Indenture includes provisions for redemption at a higher price (101% of principal) if the Ixia merger does not close by December 31, 2017, or if the merger agreement is terminated.
- 7A change of control event also triggers an obligation for Keysight to repurchase the Notes at 101% of their principal amount.
Frequently Asked Questions
The primary purpose of issuing these Senior Notes is to finance a portion of the cash consideration for Keysight's contemplated merger with Ixia, as well as to cover related fees and expenses.
The Notes have a principal amount of $700 million, mature on April 6, 2027, and carry a fixed interest rate of 4.60% per annum, paid semi-annually on April 6 and October 6, starting October 6, 2017. They are unsecured and rank equally with other unsecured and unsubordinated obligations of Keysight.
If the merger with Ixia does not occur by December 31, 2017, or if the merger agreement is terminated before that date, Keysight is obligated to redeem all of the Notes at a price equal to 101% of their aggregate principal amount, plus accrued and unpaid interest.
Yes, Keysight may redeem the Notes at its option at any time. The redemption price varies depending on whether the redemption occurs before or after January 6, 2027 (three months prior to maturity), with a premium potentially involving the greater of 100% of the principal or the present value of future payments discounted at the Treasury rate plus 0.35% for redemptions before January 6, 2027.