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Item 1.01.
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Entry into a Material Definitive Agreement.
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On May 18, 2020, PayPal Holdings, Inc. (the “Company”) issued and sold $4.0 billion aggregate principal amount of notes, consisting of $1.0 billion aggregate principal amount of 1.350% Notes due 2023 (the “2023 Notes”), $1.0 billion aggregate principal amount of 1.650% Notes due 2025 (the “2025 Notes), $1.0 billion aggregate principal amount of 2.300% Notes due 2030 (the “2030 Notes”) and $1.0 billion aggregate principal amount of 3.250% Notes due 2050 (the “2050 Notes” and, together with the 2023 Notes, the 2025 Notes and the 2030 Notes, the “Notes”).
The Notes are being issued pursuant to an indenture, dated as of September 26, 2019 (the “Base Indenture”), between the Company and Wells Fargo Bank, National Association, as trustee, together with the officer’s certificate, dated May 18, 2020 (the “Officer’s Certificate” and, together with the Base Indenture, the “Indenture”), issued pursuant to the Indenture establishing the terms of each series of Notes.
The Notes are being issued pursuant to the Company’s Registration Statement on Form S-3 filed with the Securities and Exchange Commission on September 16, 2019 (Registration Statement No. 333-233776) (the “Registration Statement”).
The 2023 Notes will mature on June 1, 2023, the 2025 Notes will mature on June 1, 2025, the 2030 Notes will mature on June 1, 2030 and the 2050 Notes will mature on June 1, 2050, unless earlier redeemed or repurchased. Interest on the Notes is payable on June 1 and December 1 of each year, beginning on December 1, 2020.
The Company may redeem the Notes for cash in whole, at any time, or in part, from time to time, prior to maturity, at redemption prices that include accrued and unpaid interest, if any, and a make-whole premium. However, no make-whole premium will be paid for redemptions of the 2023 Notes on or after June 1, 2023, for redemptions of the 2025 Notes on or after May 1, 2025, for redemptions of the 2030 Notes on or after March 1, 2030 or for redemptions of the 2050 Notes on or after December 1, 2049. The Indenture includes covenants (1) limiting the Company’s and its restricted subsidiaries ability to create liens on certain properties and capital stock and indebtedness of these restricted subsidiaries and enter into sale and leaseback transactions with respect to certain properties and (2) limiting the Company’s ability to consolidate, merge or sell all or substantially all of its assets, in each case subject to a number of important exceptions as specified in the Indenture. The Indenture also contains customary event of default provisions. In the event of the occurrence of both (1) a change of control of the Company and (2) a downgrade of a series of Notes below an investment grade rating by each of Fitch Inc., Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc. within a specified period, the Company will be required to offer to repurchase any outstanding Notes of that series at a price in cash equal to 101% of the then outstanding principal amount of such series of Notes, plus accrued and unpaid interest. The Notes are the Company’s unsecured senior obligations and rank equally in right of payment with all of the Company’s existing and future unsecured and unsubordinated indebtedness. The Notes will be structurally subordinated to the liabilities of our subsidiaries and will be effectively subordinated to any secured indebtedness to the extent of the value of the assets securing such indebtedness.
An affiliate of the Trustee is also a lender under the Company’s credit facilities.
The above description of the Indenture and the Notes does not purport to be complete and is qualified in its entirety by reference to the Indenture and the Officer’s Certificate (including the forms of Notes included therein), attached as Exhibits 4.1, 4.2, 4.3, 4.4, 4.5 and 4.6, and incorporated herein by reference.