Business Context and Reporting Period
This Form 8-K Current Report was filed by The Carlyle Group Inc. on June 8, 2021. The filing documents the entry into a material definitive agreement regarding the issuance of additional subordinated notes.
Key Financial Metrics and Transaction Details
- Debt Issuance: Issued $65,000,000 aggregate principal amount of 4.625% Subordinated Notes due 2061 (the "Add-on Notes").
- Total Series: The Add-on Notes form a single series with previously issued $435,000,000 of Existing Notes, resulting in a total outstanding principal of $500,000,000.
- Interest Rate: 4.625% per annum, accruing from May 11, 2021.
- Payment Schedule: Interest is payable quarterly on February 15, May 15, August 15, and November 15, commencing August 15, 2021.
- Maturity: May 15, 2061.
- Guarantees: The Notes are fully and unconditionally guaranteed on a subordinated basis by Carlyle Holdings I L.P., Carlyle Holdings II L.L.C., CG Subsidiary Holdings L.L.C., and Carlyle Holdings III L.P.
- Underwriter: Wells Fargo Securities, LLC served as the sole underwriter.
Material Changes and Covenants
The filing represents an expansion of the company's existing debt facility under the same indenture structure established on May 11, 2021. Key structural features include:
- Deferral Option: The Issuer may defer interest payments for up to five consecutive years under specific conditions.
- Redemption Terms:
- Optional redemption in whole or in part is permitted on or after May 15, 2026, at par plus accrued interest.
- A covenant restricts optional redemption prior to June 15, 2026.
- Early redemption is permitted at 102% of principal plus accrued interest within 90 days of a "rating agency event" prior to May 15, 2026.
- Redemption at par plus accrued interest is permitted within 120 days of a "Tax Redemption Event."
- Covenants: The Indenture includes limitations on incurring indebtedness ranking on parity with the Notes, securing junior indebtedness with liens on voting stock, and merging or selling substantially all assets.
Guidance, Risks, and Contingencies
The filing does not provide updated financial guidance, revenue outlook, or management commentary regarding operating performance. The primary risks disclosed relate to the debt instrument itself:
- Subordination: The Notes and Guarantees are unsecured and subordinated obligations.
- Events of Default: Holders of at least 25% of the outstanding Notes may declare the Notes immediately due and payable upon an event of default after any grace period. In cases of bankruptcy, insolvency, or receivership, the Notes automatically become due.
- Interest Deferral: The ability to defer interest payments for up to five years introduces uncertainty regarding cash flow obligations.
Investor Verification Checklist
- Verify the total outstanding principal of the 4.625% Subordinated Notes due 2061 is now $500,000,000.
- Confirm the interest deferral provisions and the specific conditions required to exercise them.
- Review the "rating agency event" and "Tax Redemption Event" definitions in the Base Indenture to understand early redemption triggers.
- Check the company's current leverage ratios to assess the impact of the new $65 million issuance on debt capacity.
- Confirm the status of the underwriting agreement with Wells Fargo Securities, LLC dated June 4, 2021.