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Stanley Black & Decker, Inc. (NYSE: SWK) (the “Company”) announced today that it priced its offering of 3,000,000 Equity Units (the “Units”). The offering is being made under the Company’s existing shelf registration statement previously filed with the Securities and Exchange Commission (the “SEC”) and is expected to close on December 3, 2013.
The Units will initially consist of $300 million aggregate principal amount ($100 principal amount per each Unit) of junior subordinated notes due 2018 (the “notes”) and contracts to purchase, for an aggregate of $300 million, shares of common stock. The Company has granted to the underwriters an option to purchase an additional 450,000 Units to cover over-allotments. Quarterly contract adjustment payments equivalent to 4.00% per year will be made on the stated amount of $100 per Unit. The $300 million in aggregate principal amount of notes that mature November 17, 2018, will pay interest quarterly at an annual rate of 2.25%. The Company may defer contract adjustment payments on the Units and interest payments on the notes. The notes are expected to be remarketed in November 2016 (unless the Company elects to remarket the notes earlier, during a period beginning in August 2016 and ending in October 2016), at which time the interest rate on the notes may be reset. The Company will receive gross proceeds of $300 million from the sale of the Units, before deducting the underwriters’ discounts and commissions and offering expenses (excluding any exercise of the over-allotment option).
The common stock is expected to be delivered upon settlement of the purchase contracts in November 2016 (subject to early settlement in certain circumstances).
The Company intends to use the net proceeds from the offering for general corporate purposes, including repayment of short term borrowings. The Company also intends to use a portion of the net proceeds of the offering to purchase options on its common stock. These option transactions are generally expected to provide an economic offset to dilution upon settlement of the purchase contracts if the transactions are exercised and the price per share of the Company’s common stock, as measured under the terms of the option transactions, is greater than the $98.7963 exercise price of the options, which is equal to the threshold appreciation price of the Units, subject to a cap price of $112.91, which is 40% above the closing price of the Company’s common stock on November 25, 2013.