8-KFinancial EventsOther EventsExhibits & Filings

STARBUCKS CORP 8-K Report, Financial Obligation (Feb 28, 2018)

Filed February 28, 2018For Securities:SBUX

Summary

Starbucks Corporation (SBUX) filed an 8-K on February 28, 2018, to announce the completion of a public offering of senior notes. The company issued $1.0 billion in 3.100% Senior Notes due 2023 and $600 million in 3.500% Senior Notes due 2028, totaling $1.6 billion in aggregate principal amount. These notes are unsecured obligations of Starbucks and rank equally with other senior unsecured indebtedness, but are effectively subordinated to any liabilities of its subsidiaries. The proceeds from this offering are expected to be used for general corporate purposes, which may include share repurchases, acquisitions, and capital expenditures. This debt issuance provides Starbucks with additional financial flexibility and capital to support its ongoing business operations and growth initiatives. Investors should note the specific interest rates, maturity dates, and redemption provisions associated with these new notes, as well as the change of control provisions that could trigger a repurchase offer.

Key Highlights

  • 1Completion of a $1.6 billion public offering of senior unsecured notes.
  • 2Issuance of $1.0 billion in 3.100% Senior Notes due March 1, 2023.
  • 3Issuance of $600 million in 3.500% Senior Notes due March 1, 2028.
  • 4Notes are senior unsecured obligations, ranking equally with other senior unsecured debt.
  • 5Notes are effectively subordinated to any indebtedness or liabilities of Starbucks' subsidiaries.
  • 6Includes a change of control provision requiring a repurchase offer at 101% of principal if a change of control event and downgrade to below investment grade occur.
  • 7The offering was facilitated by an underwriting agreement with major financial institutions including J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. LLC, and Wells Fargo Securities, LLC.

Frequently Asked Questions

The filing does not explicitly state the specific use of proceeds, but debt offerings of this nature are typically for general corporate purposes, which may include funding share repurchases, acquisitions, capital expenditures, or refinancing existing debt. This provides Starbucks with increased financial flexibility.

Starbucks issued $1.0 billion of 3.100% Senior Notes due 2023 and $600 million of 3.500% Senior Notes due 2028. Interest is payable semi-annually starting September 1, 2018. The notes have specific redemption provisions, including call options at par or with a 'make whole' premium prior to maturity.

The notes are Starbucks' senior unsecured obligations and will rank equally with the company's other senior unsecured indebtedness. However, they are effectively subordinated to any debt or liabilities of Starbucks' subsidiaries.

The notes include a 'change of control triggering event' provision. If both a change of control occurs and the notes are downgraded by Moody's and S&P to below investment grade, Starbucks will be required to offer to repurchase the notes at 101% of their principal amount, plus accrued interest.