Black & Decker 2014 Annual Report Download - page 83

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In December 2013, the Company remitted $351.8 million to the Trustee for the redemption of the $300 million of Black & Decker
Corporation 5.75% senior notes due 2016. The additional $51.8 million deposited with the Trustee was to ensure that the Trustee
would have sufficient funds to redeem the notes in full under the related indenture on the specified redemption date under any and
all circumstances. Upon receipt of the funds, the Company’s obligations with respect to the notes and the related indenture were
discharged and therefore, the notes were no longer an obligation of the Company. At December 28, 2013, of the $51.8 million
paid, the Company had recorded a $42.8 million pre-tax loss related to the anticipated redemption premium and $9.0 million
receivable. The loss was offset by gains of $11.9 million related to the release of fair value adjustments made in purchase accounting,
$8.1 million from the recognition of gains on previously terminated derivatives and $2.2 million of accrued interest, resulting in
a net pre-tax loss of $20.6 million. On January 24, 2014, the Trustee formally discharged the notes for a redemption value of
$342.8 million, inclusive of accrued interest and paid the Company the $9.0 million receivable.
In December 2013, the Company issued $400.0 million aggregate principal amount of 5.75% fixed-to-floating rate junior
subordinated debentures maturing December 15, 2053 (“2053 Junior Subordinated Debentures”). The 2053 Junior Subordinated
Debentures bears interest at a fixed rate of 5.75% per annum, payable semi-annually in arrears to, but excluding December 15,
2018. From and including December 15, 2018, the 2053 Junior Subordinated Debentures will bear interest at an annual rate equal
to three-month LIBOR plus 4.304% payable quarterly in arrears. The 2053 Junior Subordinated Debentures are unsecured and
rank subordinate and junior in right of payment to all of the Company’s existing and future senior debt. The 2053 Junior
Subordinated Debentures rank equally in right of payment with all of the Company’s other unsecured junior subordinated debt.
The Company received proceeds from the offering of $392.0 million, net of $8.0 million of underwriting discounts and commissions,
before offering expenses. The Company used the net proceeds primarily to repay commercial paper borrowings. The Company
may, so long as there is no event of default with respect to the debentures, defer interest payments on the debentures, from time
to time, for one or more Optional Deferral Periods (as defined in the indenture governing the 2053 Junior Subordinated Debentures)
of up to five consecutive years. Deferral of interest payments cannot extend beyond the maturity date of the debentures. The 2053
Junior Subordinated Debentures include an optional redemption provision whereby the Company may elect to redeem the
debentures, in whole or in part, at a "make-whole" premium based on United States Treasury rates, plus accrued and unpaid interest
if redeemed before December 15, 2018, or at 100% of their principal amount plus accrued and unpaid interest if redeemed after
December 15, 2018. In addition, the Company may redeem the debentures in whole, but not in part, before December 15, 2018,
if certain changes in tax laws, regulations or interpretations occur at 100% of their principal amount plus accrued and unpaid
interest.
In December 2013, the Company also issued 3,450,000 Equity Units, each with a stated value of $100 and received approximately
$334.7 million in cash proceeds, as described in greater detail below.
In November 2012, the Company issued $800 million of senior unsecured term notes, maturing on November 1, 2022 (“2022
Term Notes”) with fixed interest payable semi-annually, in arrears, at a rate of 2.90% per annum. The 2022 Term Notes are
unsecured and rank equally with all of the Company's existing and future unsecured and unsubordinated debt. The Company
received net proceeds of $793.9 million which reflects a discount of $0.7 million and $5.4 million of underwriting expenses and
other fees associated with the transaction. The Company used the net proceeds from the offering for general corporate purposes,
including repayment of short term borrowings. The 2022 Term Notes include a Change of Control provision that would apply
should a Change of Control event (as defined in the Indenture governing the 2022 Term Notes) occur. The Change of Control
provision states that the holders of the Term Notes may require the Company to repurchase, in cash, all of the outstanding 2022
Term Notes for a purchase price at 101.0% of the original principal amount, plus any accrued and unpaid interest outstanding up
to the repurchase date. In December 2014, the Company repurchased $45.7 million of the 2022 Term Notes and paid $45.3 million
cash and recognized a net pre-tax gain of less than $0.1 million after expensing $0.3 million of related loan discount costs and
deferred financing fees. At January 3, 2015, the Company's carrying value includes $0.5 million of unamortized discount.
In July and August 2012, the Company repurchased $250.0 million of The Stanley Works 6.15% senior notes due 2013, $350.0
million of The Black & Decker Corporation's 8.95% senior notes due 2014 and $300.0 million of The Black & Decker Corporation's
4.75% senior notes due 2014 by initiating an open market tender offer to purchase for cash any and all of the notes, followed by
exercising its right under the optional redemption provision of each note to repurchase any remaining notes not repurchased in
the tender offer. The Company paid a premium of $91 million to extinguish the notes, which was offset by gains of $35 million
from fair value adjustments made in purchase accounting and $10.5 million from terminated derivatives, resulting in a net pre-
tax loss of $45.5 million.
In July 2012, the Company issued $750.0 million of junior subordinated debentures, maturing on July 25, 2052 (“2052 Junior
Subordinated Debentures”) with fixed interest payable quarterly, in arrears, at a rate of 5.75% per annum. The 2052 Junior
Subordinated Debentures are unsecured and rank subordinate and junior in right of payment to all of the Company's existing and
future senior debt. The Company received net proceeds of $729.4 million and paid $20.6 million of fees associated with the
transaction. The Company used the net proceeds from the offering for general corporate purposes, including repayment of debt
and refinancing of near term debt maturities. The Company may, so long as there is no event of default with respect to the