8-KMaterial AgreementsOther EventsExhibits & Filings

TE Connectivity plc 8-K Report, Material Agreement (Nov 25, 2013)

Filed November 25, 2013For Securities:TEL

Summary

TE Connectivity plc (TEL) announced on November 25, 2013, through its wholly-owned subsidiary Tyco Electronics Group S.A. (TEGSA), the issuance of $325 million in 2.375% Senior Notes due 2018. These notes are fully and unconditionally guaranteed by TE Connectivity. The net proceeds of approximately $321.7 million are intended for general corporate purposes, potentially including debt repayment. The issuance is structured under an indenture, supplemented by an eighth supplemental indenture. The notes are unsecured senior obligations of TEGSA, ranking equally with its existing and future senior debt. TE Connectivity's guarantee is also on an unsecured senior basis. The company has outlined redemption options for the notes, including early redemption at a make-whole price or at par after a certain date, and provisions for redemption in the event of certain tax changes. Importantly, the filing details covenants that limit TEGSA's and TE Connectivity's ability to create liens, enter into sale and lease-back transactions, or merge/transfer assets. It also includes a change of control provision requiring a repurchase offer of the notes at 101% of principal if a change of control event causes the notes to be rated below investment grade by two major rating agencies. The report also specifies events of default related to payment, covenants, the guarantee, bankruptcy, and defaults on other significant indebtedness.

Key Highlights

  • 1TE Connectivity subsidiary TEGSA issued $325 million of 2.375% Senior Notes due 2018.
  • 2TE Connectivity plc provides a full and unconditional guarantee for the Notes.
  • 3Net proceeds of approximately $321.7 million will be used for general corporate purposes, possibly including debt repayment.
  • 4The Notes are unsecured senior obligations of TEGSA, ranking pari passu with other senior debt.
  • 5The indenture includes covenants restricting liens, sale-leaseback transactions, and mergers/asset transfers.
  • 6A change of control provision mandates a 101% repurchase offer if the Notes are downgraded below investment grade by two rating agencies following such an event.
  • 7Several events of default are defined, including payment defaults, covenant breaches, guarantee cessation, bankruptcy, and defaults on significant other indebtedness.

Frequently Asked Questions

This 8-K filing announces the entry into a material definitive agreement concerning the issuance of new debt. Specifically, TE Connectivity's subsidiary, TEGSA, issued $325 million of Senior Notes due 2018, with TE Connectivity acting as guarantor.

The net proceeds from the sale of the Notes, estimated at approximately $321.7 million, are designated for general corporate purposes. This may include the repayment of outstanding debt.

Investors are protected by TE Connectivity's full and unconditional guarantee, covenants that restrict certain corporate actions (like taking on secured debt or significant asset sales without a similar provision for these notes), a change of control provision that triggers a repurchase offer at a premium if credit ratings significantly decline post-acquisition, and clearly defined events of default.

The notes carry a coupon rate of 2.375% and mature on November 17, 2018 (one month prior to the stated maturity date of November 17, 2018, indicating that redemption can occur on or after this date).