Covenants
Subject to certain qualifications and exceptions, the Indenture limits the Company’s ability and the ability of certain of the Company’s subsidiaries to create liens on assets and limits the Company’s ability to merge or consolidate with any other entity or sell, transfer or lease all or substantially all of the Company’s properties and assets.
Events of Default
The Indenture also provides for certain events of default with respect to the Notes (subject, in certain cases, to receipt of notice of default and/or customary grace or cure periods), including, but not limited to, (i) failure to pay interest for 30 days, (ii) failure to pay principal or premium when due, (iii) failure to perform, or breach of, any other covenant or warranty in the Indenture for 90 days after notice is given by the Trustee or the holders of not less than 25% in aggregate principal amount of the outstanding Notes and (iv) certain specified events of bankruptcy, insolvency or reorganization of the Company.
Registration Rights Agreement
On December 1, 2021, the Company and entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with J.P. Morgan Securities LLC and Citigroup Global Markets Inc., as representatives (the “Representatives”) of the several initial purchasers named in Schedule A thereto, relating to the Notes. The Company agreed under the Registration Rights Agreement to (i) use its commercially reasonable efforts to file a registration statement on an appropriate registration form with respect to a registered offer to exchange the Notes for new notes, with terms substantially identical in all material respects to the Notes and (ii) use its commercially reasonable efforts to have such registration statement declared effective under the Securities Act.
If the exchange offer is not completed on or before March 25, 2023, the Company will use its commercially reasonable efforts to file, and will use its commercially reasonable efforts to have become and keep effective, a shelf registration statement relating to the resales of the Notes.
If the Company fails to satisfy this obligation (a “Registration Default”) under the Registration Rights Agreement, the annual interest rate on the Notes will increase by 0.25% per annum (“Additional Interest”) for the first 90-day period beginning on the day immediately following such Registration Default. The annual interest rate on the Notes will increase by an additional 0.25% per annum for each subsequent 90-day period during which the Registration Default continues, up to a maximum Additional Interest rate of 0.50% per annum. If the Registration Default is corrected, the applicable interest rate on the Notes will revert to the original level. The payment of Additional Interest shall be the sole and exclusive remedy for the holders of Notes in the event of a Registration Default.
If the Company must pay Additional Interest, the Company will pay it to the holders of the Notes in cash on the same dates that it makes other interest payments on the Notes, until the Registration Default is corrected or the related Note ceases to be a registrable security under the Registration Rights Agreement.
Documentation
The preceding is a summary of the terms of the Base Indenture, the Supplemental Indenture and the Registration Rights Agreement, and is qualified in its entirety by reference to the Base Indenture listed as Exhibit 4.1 to this report, the Supplemental Indenture listed as Exhibit 4.2 to this report and the Registration Rights Agreement listed as Exhibit 4.3 to this report, each of which is incorporated herein by reference as though fully set forth herein.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of Registrant. |
The information included in Item 1.01 of this report is incorporated by reference into this Item 2.03.
Forward-Looking Statements
This communication includes “forward-looking statements” within the meaning of within the meaning of the federal securities laws, including the Company’s projections as to the anticipated closing date for the Merger. Use of the words “may,” “will,” “would,” “could,” “should,” “believes,” “estimates,” “projects,” “potential,” “expects,” “plans,” “seeks,” “intends,” “evaluates,” “pursues,” “anticipates,” “continues,” “designs,” “impacts,” “affects,” “forecasts,” “target,” “outlook,” “initiative,” “objective,” “designed,” “priorities,” “goal,” or the negative of those words or other similar expressions is intended to identify forward-looking statements that represent the Company’s current judgment about possible future events.
These forward-looking statements are based on certain assumptions and analyses made in light of our experience and perception of historical trends, current conditions, and expected future developments as well as other factors that the Company believes are appropriate in the circumstances. While these statements represent our judgment on what the future may hold, and the Company believes these judgments are reasonable, these statements are not guarantees of any events or financial results. Whether actual future results and developments will conform to expectations and predictions is subject to a number of risks and uncertainties, including the following factors, many of which are beyond the Company’s control: conditions to the consummation of the Merger may not be satisfied or the regulatory approvals required for the Merger may not be obtained on the terms expected or on the anticipated schedule; successful integration of Hillrom with the Company and the realization of anticipated benefits of the Merger (including anticipated synergies and net leverage targets) within the expected timeframes or at all; the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger agreement between the parties to the Merger; potential adverse reactions to the Hillrom acquisition by the company or Hillrom’s strategic partners; and those factors identified in the Company’s filings with the SEC, including those factors described under the caption “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 and the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021.
Actual results may differ materially from those projected in the forward-looking statements. The Company does not undertake to update any forward-looking statements, except as required by law.
