8-KMaterial AgreementsOther EventsExhibits & Filings

TE Connectivity plc 8-K Report, Material Agreement (Dec 20, 2010)

Filed December 20, 2010For Securities:TEL

Summary

TE Connectivity plc (TEL), previously operating as Tyco Electronics Ltd., announced on December 20, 2010, through its wholly-owned subsidiary Tyco Electronics Group S.A. (TEGSA), the successful issuance of $250 million in 4.875% Senior Notes due January 15, 2021. These notes are fully guaranteed by Tyco Electronics Ltd. and were issued under a registration statement filed with the SEC. The net proceeds, approximately $246.9 million after deducting the underwriters' discount, will be utilized for general corporate purposes, which may include debt repayment. The issuance details highlight the company's strategy to strengthen its financial position and potentially reduce existing debt obligations. The notes are unsecured senior obligations of TEGSA, ranking equally with its other senior debt, and are guaranteed by Tyco Electronics Ltd. on an unsecured senior basis. The terms of the indenture include provisions for redemption at the company's option, limitations on liens and sale-leaseback transactions, and a change of control provision that would trigger a repurchase offer under specific circumstances, including a downgrade to below investment grade rating.

Key Highlights

  • 1TE Connectivity (Tyco Electronics) subsidiary, TEGSA, issued $250 million in 4.875% Senior Notes due January 15, 2021.
  • 2Tyco Electronics Ltd. provides a full and unconditional guarantee for the principal and interest payments on the Notes.
  • 3Net proceeds from the offering are approximately $246.9 million, intended for general corporate purposes, including potential debt repayment.
  • 4The Notes are unsecured senior obligations of TEGSA and rank equally with existing and future senior debt.
  • 5The indenture includes covenants that limit TEGSA's ability to create liens and enter into sale-leaseback transactions.
  • 6A change of control provision requires TEGSA to offer to repurchase the Notes at 101% of principal if the notes are rated below investment grade by two major rating agencies as a result of the change of control.
  • 7The filing details various events of default, including payment defaults, covenant breaches, and bankruptcy events.

Frequently Asked Questions

This 8-K filing announces a material definitive agreement regarding TE Connectivity's (Tyco Electronics) subsidiary, TEGSA, issuing $250 million in Senior Notes. It details the terms of the issuance, the guarantee from the parent company, the use of proceeds, and covenants related to the notes.

The net proceeds of approximately $246.9 million are designated for general corporate purposes. This may include the repayment of existing debt.

Investors are protected by a full and unconditional guarantee from Tyco Electronics Ltd. The indenture also includes covenants restricting the company's ability to incur additional liens or enter into certain sale-leaseback transactions. Furthermore, a change of control clause mandates a repurchase offer if the notes are downgraded below investment grade due to a change in control.

The change of control provision is designed to protect noteholders in the event of a significant ownership change. If such a change occurs and it results in the notes being downgraded below investment grade by two out of three major rating agencies, TEGSA must offer to buy back all the notes at a premium (101% of principal plus accrued interest), mitigating the increased risk to investors.