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.

Frequently Asked Questions

The primary purposes are to fund a tender offer to repurchase $3.0 billion of its 4.650% Senior Notes due 2024, and to repurchase approximately $3.0 billion of its common stock through accelerated share repurchase agreements.

The company issued $1.0 billion of 4.650% Senior Notes due 2032, $1.2 billion of 4.950% Senior Notes due 2052, and $800 million of 5.250% Senior Notes due 2062.

KLA Corp entered into Accelerated Share Repurchase (ASR) agreements with Goldman Sachs & Co. LLC and Citibank N.A. The company made payments totaling $3.0 billion on June 24, 2022, and expects initial deliveries of shares on the same day, with final settlement occurring by the end of the second fiscal quarter ending December 31, 2022.

The Indenture contains limited covenants, primarily restricting the company and its subsidiaries from incurring liens on certain property or stock, engaging in sale and lease-back transactions on principal property, and from consolidating or disposing of substantially all of its assets without adhering to specific terms.