ARTHUR J. GALLAGHER& CO. (NYSE:AJG) Files An 8-K Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a RegistrantItem 2.03
On December 1, 2016, Arthur J. Gallagher & Co. (“Gallagher”) closed a private placement of $100 million aggregate principal amount of unsecured senior notes (collectively, the “Series T Notes”). The Series T Notes were issued by Gallagher and certain of Gallagher’s subsidiaries (collectively, the “Subsidiary Obligors”) with an interest rate of 3.46% and are due in 2027. Interest on the Series T Notes is payable semi-annually in arrears on June 1 and December 1 of each year, beginning on June 1, 2017. Gallagher issued the Series T Notes to the terms of a Note Purchase and Private Shelf Agreement dated as of December 1, 2016 (the “Purchase Agreement”) with PGIM, Inc. (“Prudential”) and certain other affiliates of Prudential (collectively, the “Prudential Affiliates”). The Series T Notes are senior unsecured obligations of Gallagher and the Subsidiary Obligors and rank equal in right of payment with all other senior unsecured indebtedness of Gallagher and the Subsidiary Obligors.
In addition, to the Purchase Agreement, Gallagher and the Subsidiary Obligors may from time to time issue and sell, and Prudential may consider in its sole discretion the purchase of, additional unsecured senior notes by the Prudential Affiliates (the “Shelf Notes” and together with the Series T Notes, the “Notes”), in an aggregate principal amount of up to $525 million, less the amount of outstanding Series T Notes and other debt obligations of Gallagher and the Subsidiary Obligors held by the Prudential Affiliates. The Shelf Notes will have a maturity date of no more than 15 years after the date of original issuance, and may be issued through December 1, 2019, subject to certain terms and conditions of the Purchase Agreement. Interest payable on the Shelf Notes will be at rates determined by Prudential after Gallagher issues a request for purchase of Shelf Notes.
The Purchase Agreement contains customary provisions for transactions of this type, including representations and warranties regarding Gallagher and its subsidiaries and various covenants, including covenants that require Gallagher to maintain specified financial ratios. The Purchase Agreement provides for customary events of default, generally with corresponding grace periods, including, without limitation, payment defaults with respect to the Notes, covenant defaults, cross-defaults to other agreements evidencing indebtedness of Gallagher or its restricted subsidiaries, certain judgments against Gallagher or its restricted subsidiaries and events of bankruptcy involving Gallagher or its material subsidiaries.
Under the terms of the Purchase Agreement, the Notes are redeemable by Gallagher, in whole or in part, at 50% of the principal amount being redeemed, together with accrued and unpaid interest and a make-whole amount with respect to each Note. If within 90 days after a change in control Gallagher (or its successor) does not have an investment grade rating, Gallagher is obligated to offer to prepay all of the outstanding Notes at the principal amount thereof plus accrued interest (but without any make-whole amount or other premium).
About ARTHUR J. GALLAGHER & CO. (NYSE:AJG)
Arthur J. Gallagher & Co. is engaged in providing insurance brokerage and consulting services and third-party claims settlement and administration services to both domestic and international entities. The Company operates through three segments: brokerage, risk management and corporate. The Company provides insurance, brokerage and risk management services to a range of commercial, industrial, institutional and governmental organizations through its operating segments. The Company’s Brokerage segment is engaged in the negotiation and placement of insurance for its clients. The Company’s Risk Management segment is engaged in claims management, information management, risk control consulting services and appraisals in the property/casualty market. The Company’s brokers, agents and administrators act as intermediaries between insurers and their customers. ARTHUR J. GALLAGHER & CO. (NYSE:AJG) Recent Trading Information
ARTHUR J. GALLAGHER & CO. (NYSE:AJG) closed its last trading session down -0.62 at 49.73 with 1,989,160 shares trading hands.
