Item 2.03.
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Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
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As previously disclosed, on June 10, 2021, Stepan Company (“Stepan”) entered into a Note Purchase and Private Shelf Agreement by and among Stepan, PGIM, Inc., the Purchasers named in the Purchaser Schedule attached thereto and each other Prudential Affiliate (as defined therein) from time to time party thereto (the “Prudential Note Purchase Agreement”) and a Note Purchase and Master Note Agreement by and among Stepan, NYL Investors LLC, the Purchasers named in the Purchaser Schedule attached thereto and each other New York Life Affiliate (as defined therein) from time to time party thereto (the “New York Life Note Purchase Agreement” and, together with the Prudential Note Purchase Agreement, the “Agreements”).
On December 10, 2021, pursuant to the New York Life Note Purchase Agreement, the related Request for Purchase, dated as of September 30, 2021, made by Stepan to NYL Investors LLC, and the related Confirmation of Acceptance, dated as of September 30, 2021, by and among Stepan and the purchasers named therein (the “Series 2021-C Purchasers”), Stepan issued and sold to the Series 2021-C Purchasers $50 million in aggregate principal amount of its 2.73% Senior Notes, Series 2021-C, due December 10, 2031 (the “Series 2021-C Notes”). On December 10, 2021, pursuant to the Prudential Note Purchase Agreement, the related Request for Purchase, dated as of September 28, 2021, made by Stepan to PGIM, Inc., and the related Confirmation of Acceptance, dated as of September 28, 2021, by and among Stepan and the purchasers named therein (the “Series 2021-D Purchasers”), Stepan issued and sold to the Series 2021-D Purchasers $50 million in aggregate principal amount of its 2.73% Senior Notes, Series 2021-D, due December 10, 2031 (together with the Series 2021-C Notes, the “Notes”).
The Notes will bear interest at a fixed rate of 2.73% with interest to be paid semi-annually. Principal amortization for the Notes is contractually scheduled with equal annual payments beginning on December 10, 2025 and on each December 10 thereafter to and including December 10, 2030, with the outstanding principal balance due at maturity on December 10, 2031.
As previously disclosed, the Agreements require the maintenance of certain financial ratios and covenants that are similar to Stepan’s existing long-term debt and provide for customary events of default. Generally, if an event of default occurs, subject to certain exceptions, the holders of more than 51% in aggregate principal amount of the relevant Notes outstanding under the relevant Agreement may declare all such Notes to be immediately due and payable. Stepan may at any time and from time to time prepay all or a portion of either series of Notes at 100% of the principal amount so prepaid, together with interest accrued thereon to the date of such prepayment, plus a make-whole premium. In addition, as previously disclosed, Stepan Specialty Products, LLC, a wholly-owned subsidiary of Stepan (“Stepan Specialty Products”), and Stepan Surfactants Holdings, LLC, a wholly-owned subsidiary of Stepan (“Stepan Surfactants Holdings” and together with Stepan Specialty Products, the “Subsidiary Guarantors”), entered into subsidiary guaranties (the “Subsidiary Guaranties”) whereby the Subsidiary Guarantors agreed to guarantee Stepan’s obligations under the Notes and the Agreements. On December 10, 2021, the Subsidiary Guarantors entered into confirmations of such Subsidiary Guaranties.
The foregoing summary of the terms of the Agreements and the Subsidiary Guaranties is qualified in its entirety by reference to the full text of the Agreements and Subsidiary Guaranties, which are filed as Exhibit 10.1 through Exhibit 10.4 hereto and incorporated herein by reference.