Item 1.01 Entry into a Material Definitive Agreement.
On May 11, 2016, Kansas City Southern (the Company), pursuant to an Underwriting Agreement dated May 11, 2016 (the Underwriting
Agreement) among the Company, the other guarantors named therein (the Note Guarantors) and J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Morgan Stanley & Co. LLC, as
representatives of the underwriters listed therein, issued and sold $250.0 million in aggregate principal amount of 3.125% Senior Notes due 2026 (the Notes). The Notes have been registered under the Securities Act of 1933, as amended,
pursuant to a registration statement on Form S-3ASR (File No. 333-200411) previously filed with the Securities and Exchange Commission (the Registration Statement). The above description of the Underwriting Agreement is qualified in
its entirety by reference to the terms of that agreement attached hereto as Exhibit 1.1, and incorporated herein by reference.
The Notes were issued
pursuant to an Indenture dated December 9, 2015 (the Base Indenture), among KCS, the Note Guarantors and U.S. Bank National Association, as trustee (the Trustee), as supplemented by the Seventh Supplemental Indenture,
dated May 16, 2016, among the Company, the Note Guarantors and the Trustee (the Seventh Supplemental Indenture and, together with the Base Indenture, the Indenture).
The Notes are unsecured senior obligations of the Company and are unconditionally guaranteed, jointly and severally, on an unsecured senior basis, by each of
the Companys current and future domestic subsidiaries that from time to time guarantees the Companys Credit Agreement, dated December 9, 2015, among the Company, the guarantors party thereto, the various financial institutions and
other persons from time to time party thereto as lenders and/or issuing banks and Bank of America, N.A., as administrative agent for the lenders, or any other debt of the Company or any of the Companys significant subsidiaries that is a Note
Guarantor (the Note Guarantees).
The Notes will bear interest at a rate of 3.125% per annum, payable semi-annually on June 1 and
December 1 of each year, beginning on December 1, 2016, to persons who are the registered holders of the Notes on the immediately preceding May 15 and November 15, respectively. The Notes will mature on June 1, 2026 (the
Maturity Date).
The Indenture limits the ability of (i) the Company and the Note Guarantors to, among other things, create or permit any
lien or merge, consolidate or transfer substantially all of their assets and (ii) the Company to permit its subsidiaries that are not Note Guarantors to incur certain debt. In the event of a Change of Control Repurchase Event (as defined in the
Seventh Supplemental Indenture), the Company will be required to make an offer to each holder of the Notes to repurchase all or any part of that holders Notes at a repurchase price in cash equal to 101% of the aggregate principal amount of
such Notes repurchased plus accrued interest, if any, to, but excluding, the date of repurchase.
In addition, under the Indenture, the Notes may be
declared immediately due and payable by the Trustee or the holders of at least 25% in aggregate principal amount of the Notes then outstanding if any of certain events of default occur and are continuing under the Indenture. Subject to certain
qualifications and applicable grace periods as set forth in the Indenture, the events of default include the following:
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the Company fails to pay the principal or any premium on a Note on its due date;
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the Company fails to pay interest on any Note within 30 days of its due date;
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the Company defaults in the performance of or breach of any covenant of the Indenture and such default continues for a period of 90 days after written notice by the Trustee or the holders of 25% or more in aggregate
principal amount of the Notes;
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certain events of bankruptcy or insolvency described in the Indenture with respect to the Company or any Note Guarantor;
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any Note Guarantee ceases to be in full force and effect or any Note Guarantor or person acting on behalf of such Note Guarantor denies or disaffirms such Note Guarantors obligations under the Indenture or any
Note Guarantee and such default continues for a period of 10 days after written notice by the Trustee or the holders of 25% or more in aggregate principal amount of the Notes; and
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the Concession Title (as defined in the Indenture) ceases to grant to Kansas City Southern de México, S.A. de C.V. (KCSM) the rights provided therein as of December 9, 2015 and such cessation
results in a material adverse effect on the Company and its subsidiaries taken as a whole; (x) the Concession Title is for any reason terminated and not reinstated within 30 days or (y) the rights provided therein which were originally
exclusive to KCSM becomes nonexclusive and the cessation of such exclusivity results in a material adverse effect on the Company and its subsidiaries taken as a whole; or the commandeering or repossession of the Northeast Rail Lines (as defined in
the Indenture) for a period of 90 days or more.
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The Company, at its option, may redeem the Notes in whole at any time or in part from time
to time prior to March 1, 2026 (the date that is three months prior to the Maturity Date), at a redemption price equal to the greater of (i) 100% of the principal amount of the Notes to be redeemed and (ii) the sum of the present
values of the remaining scheduled payments of principal and interest on the Notes to be redeemed (exclusive of interest accrued to the date of redemption) discounted to the date of redemption on a semi-annual basis as set forth in the Indenture. On
or after March 1, 2026, the Notes may be redeemed, at the Companys option, in whole or in part at any time and from time to time at a redemption price equal to 100% of the principal amount of Notes to be redeemed plus accrued interest to
but excluding the redemption date.
The above description of the terms of the Notes is qualified in its entirety by reference to the Base Indenture and
the Seventh Supplemental Indenture. A copy of the Base Indenture was filed as Exhibit 4.1 to the Companys Current Report on Form 8-K, filed on December 15, 2015 (File No. 1-4717) and is incorporated herein by reference. A copy of the
Seventh Supplemental Indenture is attached hereto as Exhibit 4.2 and is incorporated herein by reference. The form of Note, which is included as part of the Seventh Supplemental Indenture, is attached hereto as Exhibit 4.3, and incorporated herein
by reference.