8-KMaterial AgreementsFinancial EventsExhibits & Filings

KLA CORP 8-K Report, Material Agreement (May 6, 2008)

Filed May 6, 2008For Securities:KLAC

Summary

KLA-Tencor Corporation (KLAC) has filed an 8-K report detailing a significant debt issuance. On May 2, 2008, the company issued $750 million in aggregate principal amount of 6.900% senior notes due in 2018. These notes are unsecured and rank equally with other unsecured and unsubordinated debt of KLA-Tencor, but are effectively subordinated to any future secured debt and all debt of its subsidiaries. The issuance provides KLA-Tencor with substantial capital, the specific use of which is not detailed in this filing. Investors should note the company's ability to redeem the notes early under specific 'make-whole' provisions and the provision allowing noteholders to demand repurchase at 101% of principal if a 'Change of Control Triggering Event' occurs, which typically involves both a change in control and a ratings downgrade. The indenture also includes covenants restricting the incurrence of secured debt and sale-leaseback transactions.

Key Highlights

  • 1KLA-Tencor issued $750 million in 6.900% senior notes due May 1, 2018.
  • 2The debt issuance occurred on May 2, 2008.
  • 3The notes are unsecured and rank pari passu with other unsecured, unsubordinated debt.
  • 4Notes are effectively subordinated to any future secured debt and all subsidiary debt.
  • 5KLA-Tencor has the option to redeem the notes early with a 'make-whole' premium.
  • 6Noteholders can require KLA-Tencor to repurchase notes at 101% of principal upon a 'Change of Control Triggering Event' (defined as a change of control plus a ratings downgrade).
  • 7The indenture imposes restrictions on KLA-Tencor's ability to incur secured debt and engage in sale-leaseback transactions.

Frequently Asked Questions

This 8-K filing announces KLA-Tencor Corporation's entry into a material definitive agreement, specifically the issuance of $750 million in senior notes due in 2018.

The notes bear a fixed interest rate of 6.900% per annum, payable semi-annually on May 1 and November 1. They mature on May 1, 2018. The notes are unsecured and will rank equally with KLA-Tencor's other unsecured and unsubordinated indebtedness.

Noteholders have the right to require KLA-Tencor to repurchase their notes at 101% of the principal amount plus accrued interest if a 'Change of Control Triggering Event' occurs. This event is generally defined as a combination of a change of control of the company and a downgrade of the notes' credit rating by two or more rating agencies.

Yes, the Indenture contains covenants that restrict KLA-Tencor and its subsidiaries from incurring additional secured indebtedness and from engaging in sale-leaseback transactions, subject to certain exceptions.