Summary
KLA-Tencor Corporation (KLAC) announced on November 6, 2014, the successful consummation of a significant debt offering. The company issued and sold a total of $2.5 billion in aggregate principal amount of Senior Notes across five tranches with varying maturities and interest rates. These notes range from 2.375% due in 2017 to 5.650% due in 2034, with intermediate maturities in 2019, 2021, and 2024. This substantial capital raise indicates the company's strategy to strengthen its financial position and potentially fund future growth initiatives or operational needs. The issuance was conducted under an Underwriting Agreement with J.P. Morgan Securities LLC and pursuant to an Indenture with Wells Fargo Bank, National Association, as trustee. The notes are unsecured, senior obligations of KLA-Tencor, ranking equally with other unsecured debt and senior to subordinated debt. Investors should note that these notes are effectively subordinated to any future secured debt and structurally subordinated to the debt of KLA-Tencor's subsidiaries.
Key Highlights
- 1KLA-Tencor raised a total of $2.5 billion through the issuance of Senior Notes.
- 2The offering consisted of five tranches of notes with maturities in 2017, 2019, 2021, 2024, and 2034.
- 3Interest rates on the notes range from 2.375% (2017 Notes) to 5.650% (2034 Notes).
- 4The notes are unsecured and rank senior to subordinated debt.
- 5KLA-Tencor has redemption options, including a make-whole premium, and may be required to repurchase notes upon a change of control.
- 6Covenants restrict the company's ability to incur secured indebtedness and engage in certain sale and lease-back transactions.
- 7The offering was registered under a Form S-3 registration statement filed earlier in October 2014.