Summary
Thermo Fisher Scientific Inc. (TMO) has announced its intention to redeem its outstanding 2.950% Senior Notes due 2026 and 3.200% Senior Notes due 2027. The company will redeem all of these notes, totaling approximately $1.95 billion in aggregate principal amount, on December 30, 2021. This redemption is a significant financial maneuver. The company plans to fund the entire redemption price using existing cash on hand. Investors holding these specific notes should be aware of the redemption dates and the calculation methods for the redemption price, which involve present values and comparable treasury rates, in addition to accrued interest.
Key Highlights
- 1Thermo Fisher Scientific is redeeming its $1.2 billion in 2.950% Senior Notes due 2026.
- 2Thermo Fisher Scientific is also redeeming its $750 million in 3.200% Senior Notes due 2027.
- 3The redemption date for both note series is December 30, 2021.
- 4The total aggregate principal amount being redeemed is approximately $1.95 billion.
- 5The company intends to fund the redemption using cash on hand, indicating strong liquidity.
- 6The redemption price calculation is based on a benchmark (100% of principal or present value calculation) plus accrued interest.
- 7The redemption price for the 2026 Notes includes a spread of 25 basis points over the comparable treasury rate.
- 8The redemption price for the 2027 Notes includes a spread of 20 basis points over the comparable treasury rate.
Frequently Asked Questions
Thermo Fisher Scientific is redeeming (paying off early) all of its outstanding $1.2 billion 2.950% Senior Notes due 2026 and $750 million 3.200% Senior Notes due 2027. This action will take place on December 30, 2021.
The company has stated its intention to fund the entire redemption price, approximately $1.95 billion, using its existing cash on hand. This suggests the company has sufficient liquidity.
The redemption price for both series of notes will be the greater of (i) 100% of the principal amount or (ii) the present value of the remaining scheduled payments discounted at a specific treasury rate plus a spread (25 basis points for the 2026 Notes, 20 basis points for the 2027 Notes), plus any accrued and unpaid interest up to the redemption date.
Investors holding these specific notes will receive their principal back along with accrued interest on the redemption date. The early repayment means they will no longer receive future interest payments from these notes. The company's use of cash on hand for this purpose indicates financial strength and potentially a strategic decision to manage its debt structure.