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.