8-KFinancial EventsOther EventsExhibits & Filings

LOCKHEED MARTIN CORP 8-K Report, Financial Obligation (Sep 7, 2017)

Filed September 7, 2017For Securities:LMT

Summary

Lockheed Martin Corporation (LMT) announced on September 7, 2017, the issuance of approximately $1.58 billion in new 4.09% Notes due 2052. These new notes were primarily issued in exchange for a portion of the company's existing outstanding debt securities, referred to as "old notes." This debt exchange is part of a broader strategy to refinance and potentially lower the company's overall cost of borrowing over the long term. The exchange offer, which expired on September 1, 2017, was only available to "qualified institutional buyers" and certain non-U.S. persons, indicating a targeted approach to debt management. The company also paid a small aggregate cash consideration and accrued interest on the exchanged debt. The new notes are general unsecured obligations of Lockheed Martin, ranking equally with other unsecured and unsubordinated debt, but junior to any secured debt and effectively junior to subsidiary debt.

Key Highlights

  • 1Issuance of $1,578,468,000 in new 4.09% Notes due 2052.
  • 2The new notes were issued primarily in exchange for existing "old notes" through an exchange offer.
  • 3The exchange offer was limited to "qualified institutional buyers" and certain non-U.S. persons.
  • 4Lockheed Martin paid approximately $15.9 million in cash consideration and accrued interest for the exchanged debt.
  • 5The new notes mature on September 15, 2052.
  • 6The company has the option to redeem the notes prior to maturity under specific conditions (par call and after par call date).
  • 7The new notes are general unsecured obligations, ranking equally with other unsecured debt but junior to secured debt and subsidiary debt.

Frequently Asked Questions

The primary purpose was to conduct a debt exchange offer, replacing a portion of Lockheed Martin's existing outstanding debt with new, longer-term notes carrying a lower interest rate (4.09%). This is a common strategy for companies to manage their debt structure, potentially lower interest expenses, and extend maturity profiles.

Participation was restricted to investors who qualified as 'qualified institutional buyers' (QIBs) under Rule 144A of the Securities Act, or certain non-U.S. persons as defined by Regulation S. This means the offer was not made to the general public but to sophisticated institutional investors.

The new notes bear a fixed interest rate of 4.09% per annum, payable semi-annually on March 15 and September 15, commencing March 15, 2018. The notes mature on September 15, 2052, providing long-term financing for the company.

The new notes are unsecured and unsubordinated general obligations of Lockheed Martin, meaning they rank equally in right of payment with the company's other current and future unsecured and unsubordinated indebtedness. However, they are effectively junior to any secured debt of Lockheed Martin and also junior to any debt or liabilities of the company's subsidiaries to the extent of those subsidiaries' assets.