8-KMaterial AgreementsFinancial EventsRegulation FD+1

KLA CORP 8-K Report, Material Agreement (Jun 24, 2022)

Filed June 24, 2022For Securities:KLAC

Summary

KLA Corporation (KLAC) announced a significant financing and capital return strategy through its 8-K filing on June 24, 2022. The company issued a substantial amount of senior notes, totaling $3.0 billion, across three tranches: $1.0 billion in 4.650% Senior Notes due 2032, $1.2 billion in 4.950% Senior Notes due 2052, and $800 million in 5.250% Senior Notes due 2062. This issuance was made under a new Indenture with U.S. Bank Trust Company, National Association. The proceeds from this debt issuance are earmarked for a dual purpose. A portion will be used to fund a concurrent tender offer to repurchase the company's outstanding 4.650% Senior Notes due 2024. The remaining proceeds, along with existing cash and/or revolving credit facility borrowings, will be directed towards a significant share repurchase program, aiming to buy back $3.0 billion of common stock. This suggests a proactive approach by KLA Corp to optimize its capital structure and return value to shareholders.

Key Highlights

  • 1KLA Corp issued $3.0 billion in new senior notes: $1.0 billion (4.650% due 2032), $1.2 billion (4.950% due 2052), and $800 million (5.250% due 2062).
  • 2The net proceeds from the notes offering will be used to fund a concurrent tender offer for $3.0 billion of its 4.650% Senior Notes due 2024.
  • 3The company also plans to use remaining proceeds for a share repurchase program, aiming to buy back $3.0 billion of its common stock.
  • 4KLA entered into Accelerated Share Repurchase (ASR) agreements with Goldman Sachs & Co. LLC and Citibank N.A. to execute the $3.0 billion stock buyback.
  • 5Initial deliveries of approximately 6.55 million shares are expected on June 24, 2022, with final settlement by the second fiscal quarter ending December 31, 2022.
  • 6The new senior notes are unsecured and rank equally with other unsecured and unsubordinated indebtedness of KLA Corp.
  • 7The Indenture includes covenants restricting the company's ability to incur liens, engage in sale and lease-back transactions, and dispose of substantially all assets.

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