8-KOther Events

L3HARRIS TECHNOLOGIES, INC. /DE/ 8-K Report, Corporate Update (May 24, 2018)

Filed May 24, 2018For Securities:LHX

Summary

L3Harris Technologies, Inc. (LHX) announced on May 23, 2018, its intention to redeem in full two series of its outstanding notes: $400 million in 4.40% notes due December 2020 and $400 million in 5.55% notes due October 2021. The redemption is scheduled for June 22, 2018, and will be executed at a "make-whole" redemption price. This action suggests a proactive approach by the company to manage its debt obligations and potentially refinance at more favorable terms or to optimize its capital structure. Investors should note that this redemption will extinguish all outstanding principal and accrued interest on these specific notes as of the redemption date. The redemption is a significant financial event that could indicate the company's confidence in its cash flow generation or its ability to secure new, potentially lower-cost financing. While the specific reasons for the redemption are not detailed in this filing, it is common for companies to redeem debt when interest rates have fallen, or when strategic initiatives require a shift in their debt profile. Shareholders and potential investors should monitor subsequent filings for any information regarding new debt issuances or changes in the company's overall leverage.

Key Highlights

  • 1L3Harris Technologies is redeeming in full its 4.40% notes due December 2020 ($400 million principal).
  • 2L3Harris Technologies is also redeeming in full its 5.55% notes due October 2021 ($400 million principal).
  • 3The redemption date for both note series is June 22, 2018.
  • 4The notes will be redeemed at a "make-whole" redemption price, as specified in the respective note agreements.
  • 5Upon redemption, the notes will no longer be outstanding, and interest will cease to accrue.
  • 6This action represents a total debt reduction of $800 million.
  • 7The company is using The Depository Trust Company and specified paying agents for the redemption process.

Frequently Asked Questions

The filing does not explicitly state the reason for the redemption. However, common motivations include refinancing existing debt at a lower interest rate, optimizing the company's capital structure, or improving financial flexibility. The use of a 'make-whole' price suggests the company may be taking advantage of current market conditions or its financial strength.

A 'make-whole' redemption price is designed to compensate bondholders for the loss of future interest payments they would have received had the bonds remained outstanding until maturity. It is typically calculated based on the present value of the remaining scheduled interest and principal payments, discounted at a specified rate, plus a premium.

Investors holding the 4.40% Notes due December 2020 and the 5.55% Notes due October 2021 will receive the principal amount plus a 'make-whole' premium on June 22, 2018. After this date, their rights as holders of these notes will terminate, and they will no longer receive interest payments.

The redemption will reduce the company's outstanding debt by $800 million. This could lead to lower interest expenses in the future, depending on how the company finances this redemption (e.g., using cash on hand, new debt, or equity). It may also alter the company's debt-to-equity ratio and overall leverage profile.