What is a commercial paper program and why is PG establishing one?

A commercial paper program allows a company to issue short-term, unsecured debt notes to raise funds. PG is establishing this $10 billion program to efficiently manage its short-term funding needs and to repay a portion of its existing credit facility, thereby optimizing its capital structure.

How does the guarantee from The Procter & Gamble Company affect investor risk?

The irrevocable and unconditional guarantee from the parent company, The Procter & Gamble Company, significantly reduces investor risk. It means PG is directly liable for the repayment of the commercial paper notes, providing a strong layer of credit assurance.

What is the maximum amount PG can raise through this program and for how long can the notes be outstanding?

PG can raise up to $10 billion in aggregate through this commercial paper program. The notes issued can have maturities of up to 397 days, offering flexibility in managing short-term debt.

When were these agreements entered into and who are the key financial institutions involved?

The agreements were entered into around October 23-25, 2006. Key institutions include Citibank, N.A. as the Issuing and Paying Agent, and dealers such as Goldman, Sachs & Co., J.P. Morgan Securities Inc., and Merrill Lynch entities.

PG 8-K: Material Agreements & Financial Events

01—Abstract

Summary

Summary of the 8-K filed October 27, 2006. Cited figures are marked; the original filing is the authoritative source.

This 8-K filing from Procter & Gamble (PG) on October 27, 2006, announces the establishment of a significant commercial paper program by its wholly owned indirect subsidiary, Procter & Gamble International Funding S.C.A.

This program allows for the issuance of up to $10 billion^a in short-term unsecured notes, with maturities extending up to 397 days. Initial proceeds from this program are earmarked to repay a portion of the debt incurred from a substantial $24 billion credit facility secured in July 2005.

Importantly, The Procter & Gamble Company itself provides an irrevocable and unconditional guarantee for all notes issued under this program, signifying strong backing and mitigating risk for investors. The company has also appointed several reputable financial institutions as agents and dealers to facilitate the program.

02—Key points

Key Highlights

Procter & Gamble established a $10 billion commercial paper program through its subsidiary, P&G International Funding S.C.A.
The program allows for the issuance of short-term unsecured notes with maturities up to 397 days.
Proceeds will be used to repay a portion of the $24 billion credit facility entered into on July 27, 2005.
The Procter & Gamble Company provides an irrevocable and unconditional guarantee for all notes issued under the program.
Citibank, N.A. is appointed as the Issuing and Paying Agent.
Several prominent financial institutions, including Goldman Sachs, J.P. Morgan, and Merrill Lynch affiliates, are acting as dealers for the commercial paper.

03—Questions

Frequently Asked Questions

What is a commercial paper program and why is PG establishing one?
A commercial paper program allows a company to issue short-term, unsecured debt notes to raise funds. PG is establishing this $10 billion program to efficiently manage its short-term funding needs and to repay a portion of its existing credit facility, thereby optimizing its capital structure.
How does the guarantee from The Procter & Gamble Company affect investor risk?
The irrevocable and unconditional guarantee from the parent company, The Procter & Gamble Company, significantly reduces investor risk. It means PG is directly liable for the repayment of the commercial paper notes, providing a strong layer of credit assurance.
What is the maximum amount PG can raise through this program and for how long can the notes be outstanding?
PG can raise up to $10 billion in aggregate through this commercial paper program. The notes issued can have maturities of up to 397 days, offering flexibility in managing short-term debt.
When were these agreements entered into and who are the key financial institutions involved?
The agreements were entered into around October 23-25, 2006. Key institutions include Citibank, N.A. as the Issuing and Paying Agent, and dealers such as Goldman, Sachs & Co., J.P. Morgan Securities Inc., and Merrill Lynch entities.

04—Continue

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