Northrop Grumman starts exchange offer to streamline capital structure

Chicago, Aug. 2 – Northrop Grumman Corp. launched exchange offers and consent solicitations for six series of notes on Monday, according to a press release and information from a market source.

The company is offering to exchange notes issued by wholly owned subsidiary Northrop Grumman Systems Corp. for up to $1,171,189,000 of new notes issued by the parent, plus cash.

The company is offering to exchange the following series of notes, for a like amount of new notes with the same coupons and maturity dates plus $2.50 in cash for noteholders who participate by the early deadline:

• The $269.85 million outstanding of 7 7/8% debentures due 2026 (Cusip: 666807AQ5);

• The $256,689,000 outstanding 7¾% debentures due 2026 (Cusip: 538021AC0);

• The $41,205,000 outstanding 6.65% debentures due 2028 (Cusip: 872649AQ1);

• The $89.94 million outstanding 7¾% debentures due 2029 (Cusip: 872649BH0);

• The $466.49 million outstanding 7¾% debentures due 2031 (Cusip: 666807AW2); and

• The $47,015,000 outstanding 6.98% debentures due 2036 (Cusip: 538021AH9).

Noteholders who tender after the early deadline will only receive $970 principal amount of new notes plus the $2.50 cash payment.

The rationale for the offer is that the subsidiary currently has around $1.2 billion of notes outstanding and the parent currently has around $11.7 billion of notes outstanding. The exchange is aimed at streamlining the parent’s capital structure. The exchange offers would reduce the structural subordination of the parent’s outstanding notes, which may enhance the credit profile of the notes.

Consent solicitation

Concurrently, the issuers are soliciting consents to adopt certain proposed amendments to each of the indentures governing the existing notes to eliminate certain of the covenants, restrictive provisions and events of default from the indentures. Additionally, the solicitation aims to adopt certain amendments to each of the existing guarantee agreements, dropping Northrup Grumman’s guarantee of the applicable series. In terms of the consent solicitations, the 7¾% notes due 2031 are not part of the solicitation regarding the guarantees.

Details

Each exchange offer is conditioned upon a successful corresponding consent solicitation. None of the exchange offers and related consent solicitations depend on the consummation of the offers of another series.

The early tender date is 5 p.m. ET on Aug. 13.

The final deadline is 11:59 p.m. ET on Aug. 31.

D.F. King & Co., Inc is the information and tender agent for the offer (877 783-5524, 212 269-5550, noc@dfking.com).

The global security company is based in Falls Church, Va.

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