Summary
Pfizer Inc. (PFE) announced on December 7, 2018, its intention to redeem in full its outstanding 5.750% Notes due 2021. This redemption, with a principal amount of €1,141,300,000, is scheduled for January 9, 2019. The notes will be redeemed at a 'make-whole' price determined by the terms of the indenture under which they were issued.
Key Highlights
- 1Pfizer is redeeming all of its outstanding 5.750% Notes due 2021.
- 2The aggregate principal amount of the notes to be redeemed is €1,141,300,000.
- 3The redemption date is set for January 9, 2019.
- 4The redemption will be at a 'make-whole' price, as defined in the note's indenture.
- 5Interest on the notes will cease to accrue on and after the redemption date, assuming timely payment.
- 6The Bank of New York Mellon is serving as the paying agent for this redemption.
Frequently Asked Questions
The filing does not specify the exact reason for the redemption. However, companies often redeem debt early to take advantage of lower interest rates, to eliminate debt obligations as part of a restructuring, or if the terms of the debt (like a make-whole provision) make early redemption financially attractive.
A 'make-whole' provision in a bond indenture allows the issuer to redeem the bond before its maturity date, but it requires the issuer to pay the bondholders a price that compensates them for the loss of future interest payments. This price is typically calculated based on the present value of the remaining cash flows, discounted at a specified rate (often a benchmark Treasury yield plus a spread).
Redeeming this debt will reduce Pfizer's outstanding liabilities and interest expense. The financial impact will depend on the 'make-whole' price paid and Pfizer's cost of capital for any replacement funding, if needed. Investors should look at Pfizer's subsequent financial statements for details on the execution of this redemption and any related financial adjustments.
Bondholders should refer to the official notice of redemption provided by Pfizer and handled through the paying agent, The Bank of New York Mellon. This notice will contain specific instructions on how to present their notes for payment to receive the redemption price.