8-KOther EventsExhibits & Filings

NORTHROP GRUMMAN CORP /DE/ 8-K Report, Corporate Update (Jul 30, 2009)

Filed July 30, 2009For Securities:NOC

Summary

Northrop Grumman Corporation (NOC) has filed an 8-K report detailing its recent debt issuance. On July 30, 2009, the company successfully issued $350 million in 3.70% Senior Notes due 2014 and $500 million in 5.05% Senior Notes due 2019, totaling $850 million in aggregate principal amount. These notes are unsecured senior obligations, ranking equally with existing unsecured and unsubordinated debt, but are effectively subordinated to secured debt and to all indebtedness of Northrop Grumman's subsidiaries. The issuance was conducted under an effective registration statement on Form S-3, with an Underwriting Agreement executed on July 27, 2009, with several major financial institutions acting as underwriters. This action indicates the company is actively managing its capital structure, likely to fund ongoing operations, potential acquisitions, or refinance existing debt.

Key Highlights

  • 1Northrop Grumman issued $850 million in new senior notes: $350 million of 3.70% Senior Notes due 2014 and $500 million of 5.05% Senior Notes due 2019.
  • 2The notes are unsecured senior obligations, ranking equally with existing senior unsecured debt.
  • 3The issuance occurred on July 30, 2009, with an Underwriting Agreement signed on July 27, 2009.
  • 4The notes mature on August 1, 2014 (2014 Notes) and August 1, 2019 (2019 Notes).
  • 5Interest payments will be made semi-annually on February 1 and August 1, commencing February 1, 2010.
  • 6The company retains the option to redeem the notes, in whole or in part, at specified redemption prices.
  • 7The offering was conducted under an effective Form S-3 registration statement.

Frequently Asked Questions

While the 8-K filing does not explicitly state the purpose, companies typically issue debt to fund operations, capital expenditures, acquisitions, refinance existing debt, or for general corporate purposes. Given the substantial amount, it suggests a significant strategic or financial initiative.

The notes are unsecured senior obligations, meaning they rank equally with other senior unsecured debt. However, they are effectively subordinated to any secured debt and to all debt and liabilities of the company's subsidiaries.

The 2014 Notes carry a 3.70% coupon and mature on August 1, 2014. The 2019 Notes carry a 5.05% coupon and mature on August 1, 2019. Both pay interest semi-annually starting February 1, 2010.

Yes, the filing notes that the new notes are effectively subordinated to all indebtedness and liabilities of Northrop Grumman's subsidiaries. This means that in the event of a subsidiary's financial distress or bankruptcy, creditors of the subsidiary would have a prior claim on the subsidiary's assets before any funds could flow up to the parent company to service its debt.