UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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Item 1.01 Entry into a Material Definitive Agreement.
On September 3, 2021, Sylvamo Corporation (the “Issuer”), a wholly-owned subsidiary of International Paper Company (“International Paper”), issued and sold $450 million aggregate principal amount of its 7.000% Senior Notes due 2029 (the “Notes”), which Notes are guaranteed by International Paper until the consummation of International Paper’s previously announced proposed spin-off of the Issuer (the “Spin-Off”). The Notes have been issued under the Indenture, dated as of September 3, 2021 (the “Indenture”), among the Issuer, International Paper, as guarantor, and The Bank of New York Mellon Trust Company, N.A., as Trustee (the “Trustee”). The Issuer intends to use the net proceeds from the offering, together with borrowings under the Senior Secured Credit Facilities (as defined below) and cash on hand in excess of $100 million, to make a special payment to International Paper prior to the Spin-Off.
Interest on the Notes will accrue at the rate of 7.000% per annum and will be payable semi-annually in arrears on March 1 and September 1, commencing on March 1, 2022.
Ranking
The Notes and guarantees are the Issuer’s and each subsidiary guarantor’s (as defined below) senior unsecured obligations and will rank equally in right of payment with all of the Issuer’s and such subsidiary guarantor’s existing and future senior indebtedness (including the senior secured credit facilities expected to be entered into comprising (i) a $450.0 million revolving credit facility (the “Revolving Credit Facility”), (ii) a $450.0 million term loan “B” facility (the “Term Loan B Facility”) and (iii) a $520.0 million term loan “F” facility (the “Term Loan F Facility” and together with the Term Loan B Facility, the “Term Loan Facilities”; and the Term Loan Facilities, together with the Revolving Credit Facility, the “Senior Secured Credit Facilities”)) and senior in right of payment to any of their future subordinated obligations. The Notes and guarantees are effectively subordinated to all existing and future secured indebtedness of the Issuer and each subsidiary guarantor (including the Senior Secured Credit Facilities) to the extent of the value of the assets securing such indebtedness, and structurally subordinated to all existing and future indebtedness and other liabilities of all subsidiaries that do not guarantee the Notes.
Guarantees
The Notes are initially guaranteed on a senior unsecured basis by International Paper (the “International Paper Guarantee”). As of the date of the consummation of the Spin-Off (the “Spin-Off Effective Date”), the International Paper Guarantee will terminate and be automatically and unconditionally released and discharged. In addition, each of the Issuer’s Restricted Subsidiaries (as defined in the Indenture) (x) that is a borrower or a guarantor under the Senior Secured Credit Facilities or certain other credit agreements and that is a Domestic Subsidiary (as defined in the Indenture) or a subsidiary organized in an Approved Jurisdiction (as defined in the Indenture) (other than a Domestic Subsidiary that is a FSHCO (as defined in the Indenture) or that is a subsidiary of a “controlled foreign corporation” within the meaning of Section 957(a) of the U.S. Internal Revenue Code of 1986, as amended from time to time, (a “CFC”) other than a CFC organized in an Approved Jurisdiction) or (y) that is a guarantor under Certain Capital Markets Debt (as defined in the Indenture) will guarantee on a senior unsecured basis the Notes. Such subsidiary guarantors are collectively referred to herein as the “subsidiary guarantors,” and such subsidiary guarantees are collectively referred to herein as the “subsidiary guarantees.” These subsidiary guarantees are subject to release under specified circumstances.
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Optional Redemption
At any time prior to September 1, 2024, the Issuer may, at any time and from time to time, upon notice, redeem up to 40% of the aggregate principal amount of the Notes (including the aggregate principal amount of any additional notes of the same series), issued under the Indenture, at its option, at a redemption price equal to 107.00% of the principal amount of the Notes redeemed, plus accrued and unpaid interest thereon, if any, to the date of redemption (subject to the rights of holders of Notes on the relevant record date to receive interest on the relevant interest payment date) (each, an “Equity Offering Redemption”), with funds in an aggregate amount not exceeding the net cash proceeds of one or more equity offerings by the Issuer after the Spin-Off Effective Date; provided that at least 50% of the aggregate principal amount of the Notes originally issued under the Indenture (including the aggregate principal amount of any additional notes of the same series) remains outstanding immediately after the occurrence of such redemption (unless all Notes are otherwise repurchased or redeemed substantially concurrently with the corresponding Equity Offering Redemption); provided, further, that such Equity Offering Redemption occurs within 180 days after the date on which any such related Equity Offering is consummated.
The Notes may be redeemed, in whole or in part, at any time prior to September 1, 2024, at the option of the Issuer, in whole at any time or in part from time to time, upon notice, at a redemption price equal to 100% of the principal amount of the Notes redeemed plus the applicable make-whole premium as of, and accrued and unpaid interest thereon, if any, to, the applicable redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date).
On or after September 1, 2024, the Issuer may redeem all or a part of the Notes, at its option, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest thereon, if any, on the Notes to be redeemed to the applicable redemption date, if redeemed during the twelve-month period beginning on September 1 of the years indicated below:
| Period |
Percentage | |||
| 2024 |
103.500 | % | ||
| 2025 |
101.750 | % | ||
| 2026 and thereafter |
100.000 | % | ||
In addition, during any 12-month period prior to September 1, 2024, the Issuer will be entitled to redeem, in whole at any time or in part from time to time, upon notice, at a redemption price equal to 100.0% of the principal amount of the Notes redeemed plus the applicable make-whole premium, and accrued and unpaid interest, if any, to (but not including) the applicable redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date falling prior to or on the redemption date).
Special Mandatory Redemption
If (x) the Spin-Off has not been consummated on or prior to January 4, 2022 (the “Outside Date”), (y) prior to the Spin-Off Effective Date, the Issuer notifies the Trustee in writing that International Paper will not effect the consummation of the Spin-Off by the Outside Date or (z) prior to the Spin-Off Effective Date, the Board of Directors of International Paper has made a public announcement that it has determined not to proceed with the Spin-Off, (the earliest such date, the “Special Mandatory Redemption Trigger Date”), then the Issuer will be required to cause notice of a special mandatory redemption to be mailed or sent electronically to holders of the Notes within 15 days after the Special Mandatory Redemption Trigger Date and to redeem all outstanding Notes on the 15th day (or, if such day is not a business day, the first business day thereafter) following the earlier of (x) the date such notice is mailed or sent electronically or (y) the deadline for mailing or sending such notice (the “Special Mandatory Redemption Date”) at a special mandatory redemption price equal to 100.0% of the principal amount thereof, plus accrued and unpaid interest, if any, to (but not including) the Special Mandatory Redemption Date.
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Change of Control
Upon the occurrence of a Change of Control (as defined in the Indenture), each holder of the Notes has the right to require the Issuer to repurchase some or all of such holder’s Notes at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to (but not including) the repurchase date (subject to the right of holders of the Notes on the relevant record date to receive interest on the relevant interest payment date falling prior to the repurchase date).
Covenants
The Indenture contains covenants limiting, among other things, the Issuer’s ability and the ability of most of its subsidiaries to: incur additional indebtedness or issue certain preferred shares; pay dividends on or make distributions in respect of its or their capital stock or make investments or other restricted payments; create restrictions on the ability of the Issuer’s restricted subsidiaries to pay dividends to the Issuer or make certain other intercompany transfers; sell certain assets; create liens; consolidate, merge, sell or otherwise dispose of all or substantially all of the Issuer’s assets; and enter into certain transactions with its affiliates.
Events of Default
The Indenture also provides for events of default which, if any of them occurs, would permit or require the principal of and accrued interest on the Notes to become or to be declared due and payable.
The foregoing descriptions of the Indenture and the Notes do not purport to be complete and are qualified in their entirety by reference to the full text of the Indenture and the Notes, copies of which are incorporated herein by reference and attached hereto as Exhibits 4.1 and 4.2.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth above under Item 1.01 related to the International Paper Guarantee is hereby incorporated by reference into this Item 2.03.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit Number |
Description | |
| 4.1 | Indenture, dated as of September 3, 2021, among Sylvamo Corporation, International Paper Company and The Bank of New York Mellon Trust Company, N.A., as Trustee. | |
| 4.2 | Form of 7.000% Senior Note due 2029 (included in Exhibit 4.1 hereto). | |
| 104 | Cover Page to this Current Report on Form 8-K in Inline XBRL. | |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| INTERNATIONAL PAPER COMPANY | ||
| By: | /s/ Sharon R. Ryan | |
| Name: | Sharon R. Ryan | |
| Title: | Senior Vice President, General Counsel & Corporate Secretary | |
Date: September 3, 2021
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