8-KMaterial AgreementsFinancial EventsExhibits & Filings

STARBUCKS CORP 8-K Report, Material Agreement (Jul 29, 2016)

Filed July 29, 2016For Securities:SBUX

Summary

Starbucks Corporation (SBUX) filed an 8-K on July 29, 2016, detailing an update to its existing commercial paper program. The program allows Starbucks to issue unsecured commercial paper notes up to an aggregate of $1 billion. This update includes the addition of a new dealer to facilitate the sale of these notes, enhancing the program's reach and efficiency. The primary purpose of this commercial paper program is to provide flexible short-term financing for general corporate needs. These include crucial activities such as share repurchases, business expansion initiatives, dividend payments, and potential acquisitions. The program is supported by Starbucks' existing Credit Agreement, ensuring funding availability if the commercial paper market is not favorable. This move underscores Starbucks' commitment to maintaining robust liquidity and financial flexibility to support its growth strategies and return capital to shareholders.

Key Highlights

  • 1Starbucks updated its commercial paper program, allowing for up to $1 billion in aggregate outstanding unsecured notes.
  • 2An additional dealer was engaged to expand the program's reach and facilitate the sale of commercial paper.
  • 3Proceeds from the commercial paper program will be used for general corporate purposes, including share repurchases, business expansion, dividends, and potential acquisitions.
  • 4The program is backed by Starbucks' existing Credit Agreement, providing a safety net for funding.
  • 5Notes issued under the program can have maturities of up to 397 days and will be sold at a discount or par with varying interest rates based on market conditions.
  • 6The commercial paper is issued under exemptions from registration requirements of the Securities Act of 1933.

Frequently Asked Questions

The updated commercial paper program allows Starbucks to raise up to $1 billion in short-term financing for general corporate purposes. This includes supporting share repurchases, funding business expansion, paying dividends, and financing potential acquisitions, thereby ensuring financial flexibility for growth and shareholder returns.

For investors, this program indicates Starbucks' strong financial health and proactive approach to liquidity management. The ability to access substantial short-term funding efficiently supports the company's strategic initiatives, such as share buybacks and growth investments, which can positively impact shareholder value.

Starbucks can have up to $1 billion in aggregate principal amount of unsecured commercial paper notes outstanding at any given time under this program.

The program is backstopped by Starbucks' Credit Agreement entered into on November 6, 2015. This means if funds are not available on favorable terms through the commercial paper program, Starbucks can utilize its Credit Agreement for funding.