GOVERNMENT PROPERTIES INCOME TRUST (NASDAQ:GOV) Files An 8-K Entry into a Material Definitive AgreementItem 1.01. Entry into a Material Definitive Agreement.
On July20, 2017, the Company issued $300,000,000 aggregate principal amount of its 4.000% Senior Notes due 2022, or the Notes, in an underwritten public offering. The Notes were issued under an indenture supplement, dated as of July20, 2017 and designated as the First Supplemental Indenture, between the Company and U.S. Bank National Association, or the Supplemental Indenture, to an indenture dated as of July20, 2017, between the Company and U.S. Bank National Association, or the Base Indenture, and, together with the Supplemental Indenture, the Indenture. The Notes are the Company’s senior unsecured obligations and are not guaranteed by the Company’s subsidiaries. The Notes have certain restrictive financial and operating covenants, including covenants that restrict the Company’s ability to incur debts, including debts secured by mortgages on the Company’s properties, in excess of calculated amounts, and require the Company to maintain various financial ratios.
The Notes bear interest at the rate of 4.000% per annum on the principal amount, payable semi-annually in arrears on January15 and July15 of each year. Interest will accrue on the Notes from July20, 2017, and the first interest payment date will be January15, 2018. The Notes will mature on July15, 2022, unless previously redeemed.
The Company expects to use the $295.4 million of net proceeds from the offering of the Notes (after payment of the underwriting discount and other estimated offering expenses payable by the Company) to finance, in part, the Company’s previously disclosed acquisition of First Potomac Realty Trust, or FPO, and such acquisition, the Transaction. The Company currently expects the Transaction to be completed prior to December31, 2017; however, in the event the Transaction is not completed on or prior to December31, 2017 or the related merger agreement is terminated on or at any time prior to that date, the Company will be required to redeem all of the Notes then outstanding at a special mandatory redemption price equal to 101% of the principal amount of such Notes, plus accrued and unpaid interest from July20, 2017, or the most recent date to which interest has been paid or provided for, whichever is later, to, but excluding, the redemption date.
In addition, the Company may redeem, at its option, the Notes in whole at any time or in part from time to time before they mature. In such case, the redemption price for the Notes will equal the outstanding principal amount of the Notes being redeemed, plus accrued and unpaid interest, if any, from July20, 2017, or the most recent date to which interest has been paid or provided for, whichever is later, to, but excluding, the redemption date, plus the Make-Whole Amount (as defined in the Supplemental Indenture), if any. If the Notes are redeemed on or after June15, 2022 (one month prior to their stated maturity date), the Make-Whole Amount for the Notes will equal zero.
The foregoing description of the Indenture, including the description of covenants contained therein, is not complete and is subject to and qualified in its entirety by reference to the copies of the Base Indenture and the Supplemental Indenture attached as Exhibits 4.1 and 4.2 hereto, which are incorporated herein by reference.
Item 1.02. Termination of a Material Definitive Agreement.
As previously disclosed, on June27, 2017, the Company entered into a commitment letter, or the Commitment Letter, with Citigroup Global MarketsInc. to which, on the terms and subject to the conditions set forth therein, Citigroup Global Markets Inc. (or certain of its affiliates), Bank of America, N.A., Morgan Stanley Bank, N.A. and UBSAG, Stamford Branch committed to provide us a 364-day senior unsecured bridge loan facility in an aggregate principal amount of up to $750million, to finance, in part, the Transaction. to the terms of the Commitment Letter, the net proceeds of $295.4 million from the offering of the Notes described in Item 1.01 of this Current Report on Form8-K and the net proceeds of $442.3 million from the Company’s previously disclosed July2017 issuance of common shares in an underwritten public offering reduced the aggregate commitments thereunder. On July20, 2017, the Company and the other parties thereto terminated the Commitment Letter.
Citigroup and the other parties to the Commitment Letter, as well as their affiliates, have engaged in, and may in the future engage in, investment banking, commercial banking, advisory and other dealings in the ordinary course of business with us. They have received, and may in the future receive, customary fees and commissions for these engagements. In addition, Citigroup is acting as our exclusive financial advisor for the Transaction, and Citigroup and affiliates of other parties to the Commitment Letter acted as underwriters for the offering of the Notes described in Item 1.01 of this Current Report on Form8-K and the previously disclosed July2017 issuance of common shares and received and will receive customary fees and commissions in connection therewith.
The foregoing description of the Commitment Letter is not complete and is subject to and qualified in its entirety by reference to the copy of the Commitment Letter attached as Exhibit10.1 to the Company’s Current Report on Form8-K dated June27, 2017, which is incorporated herein by reference.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information in Item 1.01 of this Current Report on Form8-K is incorporated into this Item 2.03 by reference.