Business Context and Reporting Period
This Form 8-K Current Report was filed by Ball Corporation on August 20, 2009. The filing discloses the entry into material definitive agreements regarding the issuance of new senior notes to raise capital.
Key Financial Metrics and Debt Structure
The Company completed the sale of $700,000,000 in aggregate principal amount of senior unsecured notes, structured as follows:
- 2016 Notes: $375,000,000 aggregate principal amount with a coupon rate of 7.125%, maturing September 1, 2016.
- 2019 Notes: $325,000,000 aggregate principal amount with a coupon rate of 7.375%, maturing September 1, 2019.
Interest on both series is payable semiannually on March 1 and September 1, commencing March 1, 2010. The notes are fully and unconditionally guaranteed on an unsecured senior basis by existing and future material domestic subsidiaries, excluding certain foreign subsidiaries.
Material Changes and Covenants
The issuance of these notes creates new direct financial obligations and introduces restrictive covenants that limit the Company's ability to:
- Incur additional debt or issue preferred stock.
- Pay dividends or make other restricted payments.
- Make certain investments or create liens.
- Sell assets or engage in certain sale and leaseback transactions.
- Enter into transactions with affiliates.
Certain covenants will cease to apply if the notes are rated investment grade by two of the major rating agencies (Moody's, S&P, or Fitch).
Redemption Terms and Contingencies
Redemption Options:
- Make-Whole Premium: Prior to September 1, 2013 (2016 Notes) and September 1, 2014 (2019 Notes), the Company may redeem notes at 100% of principal plus an applicable make-whole premium.
- Equity Proceeds Redemption: Prior to September 1, 2012, the Company may redeem up to 35% of the aggregate principal amount using net cash proceeds from certain equity offerings at a price of 107.125% (2016 Notes) or 107.375% (2019 Notes).
- Change of Control: In the event of a change of control, the Company must offer to purchase the notes at 101% of the principal amount plus accrued interest.
Events of Default: Include nonpayment of principal or interest, breach of covenants, defaults on other indebtedness, and bankruptcy or insolvency events. Upon default, holders of at least 25% of the outstanding notes may declare the entire series due and payable.
Investor Verification Checklist
- Verify the specific terms of the "make-whole" premium calculation in the attached Indentures (Exhibits 4.2 and 4.3).
- Confirm the list of "excluded subsidiaries" and "unrestricted subsidiaries" that are not providing guarantees.
- Review the Company's current credit rating to determine if investment-grade covenants are currently waived.
- Assess the impact of the new debt service obligations on the Company's liquidity and cash flow projections.