8-KFinancial EventsOther EventsExhibits & Filings

STARBUCKS CORP 8-K Report, Financial Obligation (Dec 5, 2013)

Filed December 5, 2013For Securities:SBUX

Summary

Starbucks Corporation (SBUX) filed an 8-K on December 5, 2013, to report on the issuance of new senior notes. The company entered into an underwriting agreement on December 2, 2013, to sell a total of $750 million in senior notes. This offering consists of $400 million in 0.875% Senior Notes due December 5, 2016, and $350 million in 2.000% Senior Notes due December 5, 2018. The proceeds from this issuance will likely be used for general corporate purposes, which could include funding growth initiatives or refinancing existing debt, although specific use of proceeds is not detailed in this filing. These notes represent senior unsecured obligations of Starbucks, ranking equally with other unsecured debt. Investors should note that they are effectively subordinated to any debt or liabilities of Starbucks' subsidiaries. The filing also outlines the terms for redemption of these notes, including a "make-whole" premium for early redemption before maturity and a provision for repurchase at 101% of principal in the event of a change of control triggering event. This debt issuance indicates Starbucks' continued access to capital markets and its strategy to manage its capital structure.

Key Highlights

  • 1Starbucks issued $750 million in new senior notes across two tranches.
  • 2$400 million of 0.875% Senior Notes due December 5, 2016.
  • 3$350 million of 2.000% Senior Notes due December 5, 2018.
  • 4The notes are senior unsecured obligations, on par with other unsecured debt.
  • 5Early redemption is possible with a "make-whole" premium.
  • 6A change of control triggering event requires a repurchase offer at 101% of principal.
  • 7The filing confirms Starbucks' ongoing access to debt financing.

Frequently Asked Questions

Starbucks issued a total of $750 million in senior notes, comprised of $400 million in 2016 Notes and $350 million in 2018 Notes.

The 2016 Notes carry a coupon rate of 0.875% and mature on December 5, 2016. The 2018 Notes have a coupon rate of 2.000% and mature on December 5, 2018.

The notes are senior unsecured obligations of Starbucks. However, they are effectively subordinated to any existing or future indebtedness or other liabilities, including trade payables, of any of Starbucks' subsidiaries.

In the event of a change of control triggering event (defined as a change of control combined with a below investment grade rating by Moody's and S&P), Starbucks is required to offer to repurchase the notes at 101% of their principal amount, plus accrued and unpaid interest.