8-KMaterial AgreementsOther EventsExhibits & Filings

TE Connectivity plc 8-K Report, Material Agreement (Feb 13, 2023)

Filed February 13, 2023For Securities:TEL

Summary

TE Connectivity plc (TEL) announced on February 13, 2023, through its wholly-owned subsidiary Tyco Electronics Group S.A. (TEGSA), the issuance of $500 million in 4.500% Senior Notes due 2026. The net proceeds from this debt offering, approximately $497.3 million after deducting the underwriters' discount, are intended for general corporate purposes, which may include the repayment of existing debt. The Notes are senior unsecured obligations of TEGSA, guaranteed by TE Connectivity, and rank equally with TEGSA's other senior debt. This filing details the terms of the Notes, including provisions for redemption at TEGSA's option under specific circumstances such as make-whole provisions or adverse tax changes. The indenture includes covenants that limit TEGSA's ability to create liens or enter into sale and lease-back transactions. Importantly, a change of control event, coupled with a downgrade in the Notes' rating below investment grade by two major credit rating agencies, would trigger an offer for TEGSA to repurchase all outstanding Notes at a premium. Various events of default are also outlined, including payment defaults, covenant breaches, and bankruptcy-related events.

Key Highlights

  • 1TE Connectivity plc (TEL) subsidiary, TEGSA, issued $500 million in 4.500% Senior Notes due 2026.
  • 2Net proceeds of approximately $497.3 million are allocated for general corporate purposes, potentially including debt repayment.
  • 3The Notes are guaranteed by TE Connectivity and are senior unsecured obligations of TEGSA.
  • 4TEGSA has the option to redeem the Notes, subject to specific make-whole provisions or adverse tax changes.
  • 5A change of control event, combined with a credit rating downgrade below investment grade, could trigger a mandatory repurchase offer by TEGSA at a premium.
  • 6The indenture contains covenants restricting liens and sale and lease-back transactions.

Frequently Asked Questions

The net proceeds from the issuance of these Senior Notes are intended for general corporate purposes, which may include the repayment of outstanding debt. This suggests TE Connectivity is managing its capital structure and potentially refinancing existing obligations.

The Notes are senior unsecured obligations of TEGSA, guaranteed by TE Connectivity. They rank equally with TEGSA's other senior debt. However, investors should note the potential redemption clauses and the 'change of control' provision, which could lead to early repurchase under specific circumstances, and the listed events of default.

Yes, if TE Connectivity undergoes a change of control and, as a result, the Notes are rated below investment grade by at least two of the major credit rating agencies (S&P, Moody's, Fitch), TEGSA will be obligated to offer to repurchase all of the Notes at 101% of their principal amount, plus accrued interest.

The Indenture imposes certain restrictions on TEGSA, including limitations on its ability to create liens to secure other debt without equally securing these Notes, and restrictions on entering into sale and lease-back transactions. It also limits TEGSA's and TE Connectivity's ability to consolidate, merge, or transfer substantially all of their assets.