Summary
Stryker Corporation (SYK) filed an 8-K on March 7, 2018, reporting the completion of a public offering of $600 million in aggregate principal amount of 3.650% notes due 2028. The net proceeds of approximately $595 million are intended to repay outstanding 1.300% notes due April 1, 2018, at maturity. This transaction effectively refinances short-term debt with longer-term financing at a higher interest rate, potentially impacting future interest expense. The offering was made under Stryker's existing shelf registration statement. The new notes are governed by an indenture that includes covenants restricting certain actions like incurring liens and engaging in sale and leaseback transactions. Notably, a change of control event coupled with a below-investment-grade rating downgrade by both Moody's and S&P would trigger an offer to purchase the notes at 101% of the principal amount, plus accrued interest.
Key Highlights
- 1Completion of a $600 million public offering of 3.650% notes due 2028.
- 2Net proceeds of approximately $595 million are earmarked to repay $600 million of 1.300% notes maturing on April 1, 2018.
- 3The company is refinancing short-term debt with longer-term debt, extending its maturity profile.
- 4The new notes bear a coupon rate of 3.650%, a significant increase compared to the 1.300% rate of the notes being repaid.
- 5The indenture includes covenants limiting the company's ability to incur certain liens and engage in sale and leaseback transactions.
- 6A "change of control" event, combined with a dual credit rating downgrade (Moody's and S&P), triggers a put option for noteholders at 101% of par.