Summary
Parker-Hannifin Corporation (PH) announced on June 7, 2019, the pricing of a significant debt offering totaling $2.375 billion. This offering comprises $575 million in senior notes due 2024, $1 billion in senior notes due 2029, and $800 million in senior notes due 2049, with stated interest rates of 2.700%, 3.500%, and 4.000% respectively. The notes are scheduled to close around June 14, 2019. The primary purpose of this debt issuance is to finance Parker-Hannifin's proposed acquisition of LORD Corporation. The company intends to use the net proceeds from this offering, in conjunction with existing credit facilities and commercial paper, to fund the LORD acquisition. However, a special mandatory redemption provision is in place for the 2024 and 2049 notes if the LORD acquisition does not close by April 27, 2020, or if the merger agreement is terminated. In such an event, these notes would be redeemed at 101% of their principal amount plus accrued interest. The proceeds from the 2029 notes, if not used for the acquisition, are designated for general corporate purposes.
Key Highlights
- 1Parker-Hannifin priced a $2.375 billion senior notes offering across three tranches: $575 million (2024), $1 billion (2029), and $800 million (2049).
- 2The interest rates for the respective notes are 2.700% for the 2024 notes, 3.500% for the 2029 notes, and 4.000% for the 2049 notes.
- 3The offering is primarily intended to finance the proposed acquisition of LORD Corporation.
- 4Proceeds will be supplemented by borrowings under existing term loan and revolving credit facilities, and/or commercial paper.
- 5The 2024 and 2049 notes are subject to a special mandatory redemption at 101% of principal plus accrued interest if the LORD acquisition does not close by April 27, 2020.
- 6The 2029 notes, if not used for the acquisition, will be used for general corporate purposes.
- 7The offering is expected to close on or about June 14, 2019.