| Item 7.01. | Regulation FD Disclosure. |
On March 15, 2019, a German subsidiary of Johnson Controls International plc (“JCI”) received a complaint from Robert Bosch GmbH (“Bosch”), filed in a German court. The complaint relates to a joint venture in which JCI’s ownership interest will be transferred to entities controlled by BCP Acquisitions LLC (the “Purchaser”) in connection with the previously announced sale of JCI’s Power Solutions business. JCI and Bosch are 80/20 parties to this joint venture, which operates a business related to automotive starter batteries and is separate from JCI’s supply agreement with Bosch.
JCI does not consider this information to be material, but is disclosing it publicly because information about the complaint is concurrently being disclosed to certain parties in an offering memorandum relating to a portion of the Purchaser’s debt financing with respect to the Power Solutions sale.
The complaint alleges that certain internal JCI reorganization transactions were not in compliance with the arrangements relating to such joint venture. The complaint seeks a declaration that such internal reorganization transactions are void. In the alternative, the complaint seeks a declaration of damages that represent an alleged difference between (i) the value ascribed to the joint venture interests in connection with the Power Solutions sale and (ii) the value that was assigned to those interests in connection with such internal reorganization transactions. JCI believes that it has several strong defenses to the substance of the complaint and that the complaint substantially overstates any reasonable valuation of the joint venture interests. JCI does not believe the complaint has merit, and intends to defend it vigorously.
While litigation is inherently uncertain, JCI believes that any ultimate liability that may arise from this proceeding would be immaterial to JCI’s business, financial condition and results of operations.
Under the previously announced Stock and Asset Purchase Agreement, dated as of November 13, 2018, between JCI and the Purchaser, JCI has agreed to indemnify the Purchaser for any damages that could arise from this litigation.
The proceeding does not impact the purchase price of the Power Solutions sale. That sale is targeted to close no later than June 30, 2019, subject to customary closing conditions and receipt of all required regulatory approvals.
Johnson Controls International plc Cautionary Statement Regarding Forward-Looking Statements
Johnson Controls International plc has made statements in this communication that are forward-looking and therefore are subject to risks and uncertainties. All statements in this document other than statements of historical fact are, or could be, “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In this communication, statements regarding Johnson Controls’ future financial position, sales, costs, earnings, cash flows, other measures of results of operations, synergies and integration opportunities, capital expenditures and debt levels are forward-looking statements. Words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,” “forecast,” “project” or “plan” and terms of similar meaning are also generally intended to identify forward-looking statements. However, the absence of these words does not mean that a statement is not forward-looking. Johnson Controls cautions that these statements are subject to numerous important risks, uncertainties, assumptions and other factors, some of which are beyond Johnson Controls’ control, that could cause Johnson Controls’ actual results to differ materially from those expressed or implied by such forward-looking statements, including, among others, risks related to: any delay or inability of Johnson Controls to realize the expected benefits and synergies of recent portfolio transactions such as the merger with Tyco and thespin-off of Adient, changes in tax laws (including but not limited to the recently enacted Tax Cuts and Jobs Act), regulations, rates, policies or interpretations, the loss of key senior management, the tax treatment of recent portfolio transactions, significant transaction costs and/or unknown liabilities associated with such transactions, the outcome of actual or potential litigation relating to such transactions, the risk that disruptions from recent transactions will harm Johnson Controls’ business, the strength of the U.S. or other economies, changes to laws or policies governing foreign trade, including increased tariffs or trade restrictions, automotive vehicle production levels, mix and schedules, energy and commodity prices, the availability of raw materials and component products, currency rates and cancellation of or changes to commercial arrangements, and with respect to the disposition of the Power
