8-KFinancial EventsOther EventsExhibits & Filings

STARBUCKS CORP 8-K Report, Financial Obligation (May 13, 2019)

Filed May 13, 2019For Securities:SBUX

Summary

Starbucks Corporation (SBUX) filed an 8-K on May 13, 2019, to report on the completion of a significant public offering of senior notes. The company successfully issued and sold $1 billion aggregate principal amount of 3.550% Senior Notes due 2029 and another $1 billion aggregate principal amount of 4.450% Senior Notes due 2049, totaling $2 billion in new debt. These notes are unsecured obligations of Starbucks and rank equally with its other senior unsecured indebtedness, though they are effectively subordinated to liabilities of its subsidiaries. The issuance was conducted under an underwriting agreement with several representatives of underwriters, including Citigroup Global Markets Inc., Morgan Stanley & Co. LLC, U.S. Bancorp Investments, Inc., and Wells Fargo Securities, LLC. The proceeds from this offering will likely be used for general corporate purposes, and the terms of the notes include provisions for redemption and a repurchase obligation in the event of a change of control triggering event. This filing provides transparency to investors regarding the company's financing activities and its ongoing capital structure management.

Key Highlights

  • 1Starbucks Corporation completed a public offering of $2 billion in senior notes on May 12, 2019.
  • 2The offering includes $1 billion of 3.550% Senior Notes due 2029.
  • 3The offering also includes $1 billion of 4.450% Senior Notes due 2049.
  • 4The notes are senior unsecured obligations and rank equally with other senior unsecured debt of Starbucks.
  • 5The notes are effectively subordinated to any existing or future indebtedness or liabilities of Starbucks' subsidiaries.
  • 6The company may redeem the notes under specified conditions and make-whole premiums, or at par value on or after certain dates.
  • 7A change of control triggering event requires Starbucks to offer to repurchase the notes at 101% of the principal amount.

Frequently Asked Questions

Starbucks raised a total of $2 billion through this public offering, consisting of $1 billion in 3.550% Senior Notes due 2029 and $1 billion in 4.450% Senior Notes due 2049.

The 8-K filing states the notes are for general corporate purposes. Investors should refer to other company communications or financial reports for specific allocation details, but typically, such offerings fund ongoing operations, capital expenditures, or refinancing.

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

Yes, the notes are subject to repurchase at the company's option under certain redemption terms. Additionally, upon the occurrence of a 'change of control triggering event' (which involves a change of control and a below investment grade rating from Moody's and S&P), Starbucks will be required to offer to repurchase the notes at 101% of their principal amount.