Section 1 — Registrant’s Business and Operations
| Item 1.01. | Entry into a Material Definitive Agreement |
Underwriting Agreement
On April 29, 2019, Lear Corporation (the “Company”) entered into an underwriting agreement (the “Underwriting Agreement”) with Citigroup Global Markets Inc, HSBC Securities (USA) Inc. and J.P. Morgan Securities LLC, as representatives of the several underwriters (the “Underwriters”), relating to the issuance and sale by the Company of $375 million in aggregate principal amount of 4.250% senior notes due 2029 (the “2029 Notes”) and $325 million in aggregate principal amount of 5.250% senior notes due 2049 (the “2049 Notes” and, together with the 2029 Notes, the “Notes”). The 2029 Notes were issued at 99.691% of par, resulting in a yield to maturity of 4.288%. The 2049 Notes were issued at 98.320% of par, resulting in a yield to maturity of 5.363%. The Notes were offered and sold pursuant to the Company’s automatic shelf registration statement on Form S-3 filed with the Securities and Exchange Commission on August 10, 2017 (Registration No. 333-219855).
The net proceeds of the offering were $686.8 million, after deducting the underwriting discounts and estimated offering expenses. The Company intends to use approximately $333.7 million of the net proceeds of the offering to redeem the outstanding $325.0 million aggregate principal amount of the Company’s 5.375% senior notes due 2024 (the “2024 Notes”) at a price equal to 102.688% of the principal amount of such 2024 Notes plus accrued and unpaid interest to, but not including, the redemption date of $3.6 million. The remaining net proceeds will be used to pay the purchase price for the Company’s acquisition of Xevo Inc. and for general corporate purposes.
The Underwriting Agreement includes customary representations, warranties and covenants by the Company. It also provides for customary indemnification by the Company and the Underwriters against certain liabilities and customary contribution provisions in respect of those liabilities.
Certain of the Underwriters and their affiliates have engaged in, and may in the future engage in, securities trading, commercial banking, investment banking, investment management, investment research, principal investment, hedging, financing, brokerage and advisory services for the Company from time to time.
The Underwriting Agreement is filed as Exhibit 1.1 hereto and incorporated herein by reference. The above description of the material terms of the Underwriting Agreement is not complete and is qualified in its entirety by reference to Exhibit 1.1.
Supplemental Indentures
On May 1, 2019, the Company completed its offering of the Notes. The Company issued the Notes pursuant to its Indenture, dated August 17, 2017 (the “Base Indenture”), between the Company and U.S. Bank National Association, as trustee (the “Trustee”), as supplemented by the Second Supplemental Indenture, dated May 1, 2019 (the “Second Supplemental Indenture”) and the Third Supplemental Indenture, dated May 1, 2019 (the “Third Supplemental Indenture,” and, together with the Second Supplemental Indenture, the “Supplemental Indentures” and, together with the Base Indenture and the Second Supplemental Indenture, the “Indenture”), between the Company and the Trustee.
The Indenture provides, among other things, that the Notes will be senior unsecured obligations of the Comp any. Interest is payable on the Notes on May 15 and November 15 of each year, beginning November 15, 2019. The 2029 Notes will mature on May 15, 2029 and the 2049 Notes will mature on May 15, 2049.
Prior to February 15, 2029, the Company may at its option redeem the 2029 Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the 2029 Notes plus the applicable premium, if any, as of, and accrued and unpaid interest to, but not including, the redemption date. On or after February 15, 2029, the Company may at its option redeem the 2029 Notes, at any time, in whole or in part, on not less than 15 nor more than 60 days’ prior notice, at a redemption price equal to 100% of the principal amount of the 2029 Notes to be redeemed, plus accrued and unpaid interest on the notes to be redeemed to, but not including, the redemption date.
