8-KFinancial EventsOther EventsExhibits & Filings

LOCKHEED MARTIN CORP 8-K Report, Financial Obligation (Dec 17, 2012)

Filed December 17, 2012For Securities:LMT

Summary

Lockheed Martin Corporation (LMT) filed an 8-K on December 17, 2012, to report the details of a debt exchange offer. The company issued approximately $1.34 billion in new 4.07% notes due 2042, in exchange for a portion of its existing outstanding debt securities. This transaction also involved an additional cash payment of approximately $225.4 million from Lockheed Martin to holders of the old notes, alongside accrued interest and cash in lieu of fractional notes. This debt restructuring indicates a strategic move by Lockheed Martin to refine its debt profile. The new, lower coupon rate on the 2042 notes suggests an effort to reduce future interest expenses and potentially extend its debt maturity. Investors should note that the new notes are general unsecured obligations, ranking equally with other unsecured and unsubordinated debt, but are effectively junior to secured debt and any subsidiary debt. The offering was made to "qualified institutional buyers" and non-U.S. persons, with Lockheed Martin agreeing to register the new notes for future exchange or resale.

Key Highlights

  • 1Lockheed Martin issued approximately $1.34 billion in new 4.07% Notes due 2042.
  • 2The new notes were issued in an exchange offer for a portion of the company's existing outstanding debt securities.
  • 3Lockheed Martin paid approximately $225.4 million in cash, plus accrued interest, as part of the exchange offer.
  • 4The exchange offer expired on December 12, 2012, and was limited to "qualified institutional buyers" and non-U.S. persons.
  • 5The new notes are general unsecured obligations of Lockheed Martin.
  • 6The new notes mature on December 15, 2042, and bear interest payable semi-annually.
  • 7Lockheed Martin agreed to register the new notes via an exchange offer or shelf registration to allow for their future trading in registered form.

Frequently Asked Questions

The primary purpose of this 8-K filing was to report the completion of a debt exchange offer. Lockheed Martin issued new notes and exchanged them for a portion of its existing outstanding debt, along with a cash payment.

The new notes have a principal amount of approximately $1.34 billion, mature on December 15, 2042, and bear interest at a rate of 4.07% per annum, payable semi-annually on June 15 and December 15. Lockheed Martin has the option to redeem the notes under specific conditions outlined in the indenture.

The new notes are general unsecured obligations of Lockheed Martin and rank equally with its other current and future unsecured and unsubordinated indebtedness. However, they are effectively junior to any secured debt to the extent of the assets securing that debt and are also effectively subordinated to all indebtedness and liabilities of Lockheed Martin's subsidiaries.

The registration rights agreement obligates Lockheed Martin to file a registration statement with the SEC. This is intended to allow holders of the new notes to exchange them for substantially identical registered notes or to resell them under a shelf registration, making them more liquid and freely tradable over time.