Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
On June 13, 2016, the Company issued $2 billion aggregate principal amount of the Notes pursuant to the Indenture at an issue price of 100% of the principal amount of the Notes. The Notes were sold in a private placement to (1) qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the Securities Act) and (2) outside the United States to persons who are not U.S. persons (as defined in Rule 902 of Regulation S under the Securities Act) in compliance with Regulation S under the Securities Act.
The Notes bear interest at a rate of 7.75% per annum and mature on July 1, 2026. Interest on the Notes will be payable semi-annually on January 1 and July 1 of each year, commencing January 1, 2017, to the holders of record of such Notes at the close of business on December 15 or June 15, respectively, preceding such interest payment date. The Indenture contains covenants that will limit the Companys ability and, in certain instances, the ability of certain of the Companys subsidiaries, to, among other things: (i) incur additional debt; (ii) pay dividends or make distributions on the Companys capital stock or repurchase the Companys capital stock; (iii) make certain investments; (iv) create liens or enter into sale and leaseback transactions; (v) enter into transactions with affiliates; (vi) merge or consolidate with another company; and (vii) transfer and sell assets. These covenants include certain exceptions.
The Company may, at its option, at any time and from time to time redeem all or any portion of the Notes on not less than 30 and not more than 60 days prior notice mailed to the holders of the Notes to be redeemed. The Notes will be redeemable at a price equal to the principal amount of the Notes being redeemed, plus accrued and unpaid interest to the date of redemption and a make-whole premium calculated under the Indenture. At any time prior to July 1, 2019, the Company may also redeem up to 35% of the Notes at a purchase price equal to 107.75% of the principal amount of the Notes redeemed plus accrued and unpaid interest, if any, through the date of redemption with the net cash proceeds from certain equity offerings or capital contributions.
The Indenture provides for customary events of default, including: nonpayment, breach of the covenants in the Indenture, payment defaults or acceleration of other indebtedness, a failure to pay certain judgments and certain events of bankruptcy, insolvency and reorganization. If any event of default occurs and is continuing under the Indenture, the trustee or the holders of at least 25% in principal amount of the then outstanding Notes issued pursuant to the Indenture may declare all the Notes issued pursuant to the Indenture to be due and payable immediately, together with interest, if any, accrued thereon.
Under the terms of a Registration Rights Agreement, the Company has agreed to register notes having substantially identical terms as the Notes with the Securities and Exchange Commission as part of an offer to exchange freely tradable exchange notes for the Notes.
The description set forth above is qualified in its entirety by the Indenture and the Registration Rights Agreement filed herewith as exhibits.
A copy of the Registration Rights Agreement is attached hereto as Exhibit 4.2 and incorporated herein by reference.
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