Summary
This 8-K filing by Harris Corporation (now L3Harris Technologies) on May 27, 2015, reports the early redemption of its outstanding 5.95% Notes due 2017 and 6.375% Notes due 2019. The company exercised its option, announced on April 27, 2015, to redeem these notes in full, totaling $400 million for the 2017 notes and $350 million for the 2019 notes. The redemption was executed at a premium, including a make-whole provision, indicating the company likely sought to refinance or reduce its debt obligations. The total cost for redeeming the 2017 notes was approximately $459.8 million, and for the 2019 notes, approximately $425.0 million. This action effectively terminates and cancels these specific debt instruments.
Key Highlights
- 1Harris Corporation redeemed in full its $400 million aggregate principal amount of 5.95% Notes due 2017.
- 2Harris Corporation redeemed in full its $350 million aggregate principal amount of 6.375% Notes due 2019.
- 3The redemption occurred on May 27, 2015, with the company having announced its intention to redeem on April 27, 2015.
- 4The redemption involved a make-whole provision, resulting in amounts paid above the principal, reflecting early repayment costs.
- 5The 2017 Notes were redeemed for approximately $459.8 million (including make-whole premium).
- 6The 2019 Notes were redeemed for approximately $425.0 million (including make-whole premium).
- 7As a result of the redemption, both series of notes were terminated and cancelled.
Frequently Asked Questions
The primary purpose of this 8-K filing was to formally announce Harris Corporation's completion of the early redemption of its outstanding 5.95% Notes due 2017 and 6.375% Notes due 2019.
While not explicitly stated in the filing, companies typically redeem debt early to take advantage of lower interest rates for refinancing, to reduce outstanding debt, or to simplify their capital structure. The inclusion of a 'make-whole' redemption price suggests they may have been seeking more favorable financing terms.
The total cost for redeeming the 2017 Notes was approximately $459.8 million, and the total cost for redeeming the 2019 Notes was approximately $425.0 million. These amounts include the principal and the make-whole redemption premiums.
A make-whole redemption price is a provision in some debt agreements that requires the issuer to pay bondholders an amount that compensates them for the loss of future interest payments. It's typically higher than the face value of the bonds and reflects the present value of the remaining interest payments plus the principal.