Summary
Lowe's Companies, Inc. (LOW) filed an 8-K on May 3, 2017, to report a significant financing event. The company successfully issued $3.0 billion in aggregate principal amount of unsecured notes, divided equally between 3.100% Notes due 2027 ($1.5 billion) and 4.050% Notes due 2047 ($1.5 billion). The net proceeds from this issuance are approximately $2.96 billion, which will likely be used for general corporate purposes, including the refinancing of outstanding debt as indicated by accompanying press releases concerning tender offers. This move increases Lowe's long-term debt obligations, but the company has secured these funds at what appear to be competitive rates for the respective tenors. The notes are unsecured and rank equally with existing senior unsecured indebtedness. The indenture includes covenants that restrict subsidiaries from issuing debt but do not limit the company's ability to incur further indebtedness. Investors should note the redemption features and the change of control provisions that offer some protection to noteholders.
Key Highlights
- 1Lowe's issued $3.0 billion in unsecured notes: $1.5 billion of 3.100% Notes due May 3, 2027, and $1.5 billion of 4.050% Notes due May 3, 2047.
- 2Net proceeds from the note issuance were approximately $2.96 billion.
- 3The notes are governed by an Amended and Restated Indenture and a Fourteenth Supplemental Indenture.
- 4The notes are unsecured and rank equally with other senior unsecured indebtedness.
- 5The indenture restricts subsidiary debt issuance but not company-level debt incurrence.
- 6Notes are redeemable at the company's option, with specific call provisions and redemption prices based on Treasury rates and a spread.
- 7A 'Change of Control Triggering Event' allows noteholders to require repurchase at 101% of principal, plus accrued interest.