8-KFinancial EventsOther EventsExhibits & Filings

STARBUCKS CORP 8-K Report, Financial Obligation (May 7, 2020)

Filed May 7, 2020For Securities:SBUX

Summary

Starbucks Corporation (SBUX) filed an 8-K on May 7, 2020, to announce the completion of a public offering of senior notes totaling $3 billion. This offering consists of three tranches: $500 million in 1.300% Senior Notes due 2022, $1.25 billion in 2.550% Senior Notes due 2030, and $1.25 billion in 3.500% Senior Notes due 2050. These notes are senior unsecured obligations of the company. The issuance of these notes provides Starbucks with significant capital, likely to strengthen its financial position and support operations, especially considering the economic uncertainties prevalent at the time of filing in May 2020. The offering was conducted under an underwriting agreement with several prominent investment banks, including BofA Securities, Citigroup, J.P. Morgan, and Morgan Stanley. The terms of the notes include provisions for redemption, and a repurchase obligation upon a change of control triggering event.

Key Highlights

  • 1Completed a public offering of $3 billion in senior notes on May 7, 2020.
  • 2Issued $500 million of 1.300% Senior Notes due 2022.
  • 3Issued $1.25 billion of 2.550% Senior Notes due 2030.
  • 4Issued $1.25 billion of 3.500% Senior Notes due 2050.
  • 5The notes are senior unsecured obligations of Starbucks.
  • 6Includes provisions for redemption by Starbucks and a repurchase obligation upon a change of control triggering event.
  • 7The offering was underwritten by BofA Securities, Citigroup, J.P. Morgan, and Morgan Stanley.

Frequently Asked Questions

While the filing doesn't explicitly state the purpose, such a significant debt issuance typically aims to strengthen the company's liquidity position, fund general corporate purposes, refinance existing debt, or support strategic initiatives. Given the filing date of May 7, 2020, it likely aimed to bolster financial flexibility during a period of economic uncertainty.

The new notes have the following terms: 1.300% Senior Notes due May 7, 2022; 2.550% Senior Notes due November 15, 2030; and 3.500% Senior Notes due November 15, 2050.

The notes are classified as senior unsecured obligations, meaning they rank equally with other senior unsecured indebtedness of Starbucks. However, they are effectively subordinated to any existing or future indebtedness or liabilities of Starbucks' subsidiaries.

Yes, upon the occurrence of a 'change of control triggering event' (defined as a change of control coupled with a downgrade to below investment grade by Moody's and S&P), Starbucks will be required to make an offer to repurchase these notes at 101% of their principal amount, plus accrued interest.