8-KMaterial AgreementsFinancial EventsExhibits & Filings

NORTHROP GRUMMAN CORP /DE/ 8-K Report, Material Agreement (Oct 13, 2017)

Filed October 13, 2017For Securities:NOC

Summary

Northrop Grumman Corporation (NOC) filed an 8-K on October 13, 2017, to report the issuance of a substantial aggregate principal amount of senior notes totaling $8.75 billion. These notes are structured with varying interest rates and maturity dates, ranging from 2020 to 2047. The issuance was conducted through an underwriting agreement with several major financial institutions. This significant debt issuance is directly linked to Northrop Grumman's pending acquisition of Orbital ATK, Inc. The terms of the debt include covenants related to liens, sale and leaseback transactions, and asset sales, with specific provisions tied to the consummation of the Orbital ATK acquisition. A critical element for investors is the special mandatory redemption clause. If the Orbital ATK acquisition does not close by December 17, 2018, or if the merger agreement is terminated prior to that date (without the acquisition closing), Northrop Grumman will be obligated to redeem certain tranches of these newly issued notes (2020, 2022, 2025, and 2047 notes) at a premium of 101% of their principal amount, plus accrued interest. This structure highlights how the company is financing its strategic growth and the associated financial implications tied to the successful completion of this major acquisition.

Key Highlights

  • 1Northrop Grumman issued $8.75 billion in senior notes across five tranches with maturities from 2020 to 2047.
  • 2The notes carry fixed interest rates ranging from 2.080% to 4.030%.
  • 3The debt issuance is tied to the pending acquisition of Orbital ATK, Inc.
  • 4A special mandatory redemption will occur if the Orbital ATK acquisition does not close by December 17, 2018, requiring redemption of certain notes at 101% of face value plus accrued interest.
  • 5The indenture governing the notes includes covenants related to liens, sale and leaseback transactions, and asset sales.
  • 6The issuance was facilitated by a syndicate of major underwriters, including J.P. Morgan Securities, Credit Suisse Securities, Goldman Sachs & Co., and Wells Fargo Securities.

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