8-KMaterial AgreementsOther EventsExhibits & Filings

TE Connectivity plc 8-K Report, Material Agreement (Jan 28, 2016)

Filed January 28, 2016For Securities:TEL

Summary

TE Connectivity plc (TEL) filed an 8-K on January 27, 2016, reporting on the issuance of new debt. On January 28, 2016, a wholly-owned subsidiary, Tyco Electronics Group S.A. (TEGSA), issued $350 million in 3.700% Senior Notes due 2026. TE Connectivity Ltd. fully guarantees these notes on an unsecured senior basis. The net proceeds of approximately $347 million are earmarked for general corporate purposes. The filing also details the terms of the notes, including redemption options for TEGSA, specific covenants limiting liens and sale-leaseback transactions, and provisions for repurchase in the event of a change of control that results in a below-investment-grade rating. Standard events of default are outlined, which include payment defaults, breaches of covenants, cessation of the guarantee, bankruptcy, and defaults on other material indebtedness.

Key Highlights

  • 1Issuance of $350 million in 3.700% Senior Notes due 2026 by subsidiary TEGSA.
  • 2TE Connectivity Ltd. provides an unconditional, unsecured senior guarantee for the notes.
  • 3Net proceeds of approximately $347 million will be used for general corporate purposes.
  • 4Notes can be redeemed by TEGSA at a make-whole price before November 2025, and at par thereafter.
  • 5Covenants include limitations on liens, sale-leaseback transactions, and asset transfers.
  • 6A change of control event, leading to a downgrade below investment grade, triggers a mandatory repurchase offer at 101% of principal.

Frequently Asked Questions

The net proceeds from the issuance of these $350 million Senior Notes are intended for general corporate purposes. This indicates the company is likely using the funds for ongoing business operations, potential investments, or to manage its existing debt obligations.

The Senior Notes carry a coupon rate of 3.700% and are due to mature in 2026. This provides TE Connectivity with a fixed-cost source of long-term financing.

Investors are protected by TE Connectivity's full and unconditional senior guarantee. Additionally, if a change of control occurs and the notes are downgraded below investment grade by major rating agencies, TEGSA must offer to repurchase the notes at 101% of their principal amount. The indenture also outlines standard events of default, such as payment failures, covenant breaches, or bankruptcy.

The indenture includes covenants that limit TEGSA's ability to create liens to secure other debt without also securing these notes, and restricts its ability to enter into sale and lease-back transactions. It also limits consolidation, merger, and asset transfer activities, subject to certain qualifications and exceptions.