Business Context and Reporting Period
This Form 8-K Current Report was filed by TechnipFMC plc on January 29, 2021. The filing documents the completion of a material definitive agreement involving the issuance of senior notes to fund debt repayment, a planned business spin-off, and general corporate purposes.
Key Financial Metrics
- Debt Issuance: $1,000,000,000 aggregate principal amount of 6.500% senior notes due 2026.
- Net Proceeds: Approximately $985,000,000 after underwriting discounts and estimated offering expenses.
- Interest Rate: 6.500% per annum, payable semi-annually in arrears.
- Maturity Date: February 1, 2026.
- First Interest Payment: August 1, 2021.
- Liquidity Status: Gross proceeds are held in a deposit account at JPMorgan Chase Bank, N.A., pending the consummation of the Technip Energies spin-off.
Material Changes and Use of Proceeds
The Company intends to utilize the net proceeds from the note issuance for the following specific purposes:
- Full repayment and termination of certain existing indebtedness.
- Payment of fees and expenses related to the previously announced spin-off of its Technip Energies business segment.
- Provision of working capital and general corporate purposes.
The offering size was increased from a previously announced $850,000,000 to $1,000,000,000.
Guidance, Risks, and Covenants
Redemption and Repurchase Obligations:
- Make-Whole Redemption: The Company may redeem notes prior to February 1, 2023, subject to a make-whole premium.
- Equity Proceeds Redemption: Up to 40% of the notes may be redeemed prior to February 1, 2023, using net cash proceeds from certain equity offerings.
- Change of Control: The Company must offer to repurchase notes at 101% of principal plus accrued interest upon certain change of control events.
- Spin-off Contingency: If the Technip Energies spin-off is not consummated by July 31, 2021, or is terminated/abandoned prior to that date, the Company is required to redeem all notes at 100% of principal plus accrued interest.
Covenants: The Indenture includes customary covenants limiting the ability to incur additional indebtedness, pay dividends, repurchase stock, transfer assets, and engage in affiliate transactions. Certain covenants may terminate if the notes receive investment-grade credit ratings.
Events of Default: Include failure to make payments, covenant violations, bankruptcy, and failure to pay judgments. Default allows acceleration of amounts due by the Trustee or holders of at least 25% of the notes.
Investor Verification Checklist
- Verify the status and expected timeline of the Technip Energies spin-off, as failure to close by July 31, 2021, triggers a mandatory redemption of the notes.
- Confirm the specific existing indebtedness scheduled for repayment with the net proceeds.
- Review the full text of the Indenture (Exhibit 4.1) for detailed covenant restrictions and exceptions.
- Monitor the Company's credit rating status, as achieving investment-grade ratings could terminate certain restrictive covenants.
- Check subsequent filings for updates on the use of proceeds held in the JPMorgan Chase deposit account.