8-KFinancial EventsOther EventsExhibits & Filings

STARBUCKS CORP 8-K Report, Financial Obligation (Sep 6, 2013)

Filed September 6, 2013For Securities:SBUX

Summary

Starbucks Corporation (SBUX) has filed an 8-K report on September 5, 2013, disclosing a significant debt issuance. The company entered into an underwriting agreement to issue and sell $750 million in aggregate principal amount of 3.850% Senior Notes due October 1, 2023. These notes are senior unsecured obligations, ranking equally with other unsecured and unsubordinated debt of Starbucks. This issuance provides Starbucks with additional capital, likely for general corporate purposes or strategic initiatives, and extends its debt maturity profile. The interest rate of 3.850% suggests favorable borrowing costs at the time. Investors should note the terms of redemption, including the possibility of early redemption at a "make whole" premium before July 1, 2023, and at par thereafter. A change of control provision mandates an offer to purchase the notes at 101% of the principal amount under specific conditions, providing a layer of investor protection.

Key Highlights

  • 1Starbucks issued $750 million in 3.850% Senior Notes due October 1, 2023.
  • 2The notes are senior unsecured obligations, ranking equally with existing unsecured and unsubordinated debt.
  • 3The issuance occurred on September 3, 2013, with the filing date of September 5, 2013.
  • 4The company can redeem the notes before July 1, 2023, at a 'make whole' premium or at par on or after July 1, 2023.
  • 5A change of control event triggers an offer to repurchase the notes at 101% of the principal amount plus accrued interest.
  • 6The proceeds from the issuance are intended for general corporate purposes.

Frequently Asked Questions

The primary purpose of this 8-K filing is to announce Starbucks' agreement to issue and sell $750 million of its 3.850% Senior Notes due 2023. It details the terms of this significant debt offering, including interest rates, maturity dates, and redemption provisions.

This issuance increases Starbucks' total debt by $750 million. The notes are senior unsecured obligations, meaning they hold the same priority as other unsecured debts. This move likely diversifies Starbucks' funding sources and potentially extends its weighted average debt maturity.

Yes, bondholders have two key protections. First, Starbucks can redeem the notes before maturity, but before July 1, 2023, it must pay a 'make whole' premium, ensuring bondholders receive compensation for early retirement. Second, upon a 'change of control triggering event' (defined by specific corporate control changes and credit rating downgrades), Starbucks is obligated to offer to purchase the notes at 101% of their principal amount, plus accrued interest.

The notes carry a 3.850% annual interest rate, payable semi-annually on April 1 and October 1, with the first payment on April 1, 2014. They mature on October 1, 2023. The notes are unsecured and rank equally with other senior unsecured debt of the company. They are also subject to specific redemption terms and a change of control provision.