| Item 1.01. | Entry into a Material Definitive Agreement. |
Offering of 4.000% Senior Notes due 2023
On September 19, 2018, Fortune Brands Home & Security, Inc. (the “Company”) entered into an Underwriting Agreement (the “Underwriting Agreement”) with Barclays Capital Inc., J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, acting for themselves and as representatives of the several underwriters named therein, in connection with the offer and sale of $600 million aggregate principal amount of the Company’s 4.000% Senior Notes due 2023 (the “Notes”) in an underwritten public offering (the “Offering”). The Underwriting Agreement contains representations, warranties and agreements of the Company, conditions to closing, indemnification and contribution rights and obligations of the parties, termination provisions and other terms and conditions in each case that are customary in agreements of this type.
The issuance and sale of the Notes closed on September 21, 2018. The Notes were issued pursuant to an Indenture, dated as of June 15, 2015, by and among the Company and Wilmington Trust, National Association, as trustee, and Citibank, N.A., as securities agent (the “Base Indenture”), as supplemented by a Second Supplemental Indenture, dated September 21, 2018 (the “Second Supplemental Indenture” and, together with the Base Indenture, the “Indenture”).
The aggregate net proceeds from the sale of the Notes were approximately $594,914,000, after deducting the underwriting discount and estimated offering expenses. The Company intends to use the net proceeds from sale of the Notes to repay indebtedness outstanding under its $1.25 billion committed revolving credit facility. From time to time in the ordinary course of their respective businesses, certain of the underwriters and their affiliates have engaged in, and may in the future engage in, investment banking and other commercial dealings with the Company or its affiliates. They have received, or may in the future receive, customary fees and commissions for these transactions. An affiliate of J.P. Morgan Securities LLC serves as administrative agent and is a lender on the Company’s revolving credit facility, Merrill Lynch, Pierce, Fenner & Smith Incorporated, an affiliate of Barclays Capital Inc. and affiliates of certain of the other underwriters serve as joint lead arrangers and joint bookrunners and are lenders on the Company’s revolving credit facility. Accordingly, affiliates of J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Capital Inc. and certain of the other underwriters which are lenders under the Company’s revolving credit facility will receive their pro rata portions of the borrowings repaid thereunder, and the amount received by such affiliates through the repayment of those borrowings may exceed 5% of the proceeds of the Offering. In the event that greater than 5% of the net proceeds from the Offering are used to repay indebtedness owed to any individual underwriter or its affiliates, the Offering will be conducted in accordance with FINRA Rule 5121.
The Notes will mature on September 21, 2023 and bear interest at a fixed rate of 4.000% per annum. Interest on the Notes will accrue from September 21, 2018 and be payable semi-annually in arrears on March 21 and September 21 of each year, commencing March 21, 2019.
The Notes will be senior unsecured obligations of the Company and will rank equally in right of payment with all of the Company’s existing and future senior unsecured indebtedness from time to time outstanding and will rank senior in right of payment to all of the Company’s existing and future subordinated indebtedness outstanding from time to time.
Prior to August 21, 2023, the Company may redeem the Notes, in whole or in part, at any time and from time to time, at a redemption price equal to the greater of (i) 100% of the principal amount of the Notes then outstanding to be redeemed and (ii) the sum of (x) the present values of the remaining scheduled payments of principal and interest on the Notes to be redeemed (excluding interest accrued to the redemption date), discounted to the redemption date on a semi-annual basis at the Adjusted Treasury Rate (as defined in the Supplemental Indenture) plus 20 basis points, and (y) accrued and unpaid interest on the applicable series of Notes being redeemed to, but not including, the redemption date.
At its option, (i) at any time on and after August 21, 2023, the Company may redeem the Notes, in whole or in part, at a redemption price equal to 100% of the aggregate principal amount of the Notes being redeemed plus accrued and unpaid interest on the Notes being redeemed to, but not including, the redemption date.
