Item 1.01.
Entry into a Material Definitive Agreement.
On August 17, 2017
(the Closing Date), OReilly Automotive, Inc. (the Company) issued and sold $750 million aggregate principal amount of the Companys 3.600% Senior Notes due 2027 (the Notes).
The terms of the Notes are governed by an Indenture, dated as of March 8, 2016 (the Base Indenture), by and among the Company, the subsidiaries of the Company party thereto and UMB Bank, N.A. (the Trustee), as supplemented and amended by the Second Supplemental Indenture, dated as of the Closing Date (the Supplemental Indenture and, together with the Base Indenture, the Indenture), by and between the Company and the Trustee.
The Notes mature on September 1, 2027 and bear interest at a rate of 3.600% per year. Interest on the Notes is payable on March 1 and September 1 of each year, beginning on March 1, 2018. The Notes are the Companys general unsecured senior obligations and are equal in right of payment with all of the Companys other existing and future unsecured and unsubordinated indebtedness, including the Companys credit facility and the Companys 4.875% Senior Notes due 2021, the Companys 4.625% Senior Notes due 2021, the Companys 3.800% Senior Notes due 2022, the Companys 3.850% Senior Notes due 2023 and the Companys 3.550% Senior Notes due 2026 (such series of notes, collectively, the Existing Notes). The Notes are effectively junior to the Companys future secured indebtedness, if any, to the extent of the value of the collateral securing such indebtedness.
The Notes are not initially guaranteed by any of the Companys subsidiaries. However, if in the future, any of the Companys subsidiaries incurs or guarantees obligations under the Companys credit facility or certain other credit facility debt or capital markets debt of the Company or any future subsidiary guarantor, such subsidiary would be required to guarantee the Notes on a senior unsecured basis. The Company would be permitted to release any such future guarantee without the consent of holders of the Notes under the circumstances described in the Indenture.
Prior to June 1, 2027 (three months prior to the maturity date (such date, the Par Call Date)), the Notes are redeemable, in whole, at any time, or in part, from time to time, at the Companys option, for cash, at a redemption price, plus accrued and unpaid interest to, but not including, the redemption date, equal to the greater of (1) 100% of the principal amount thereof, or (2) the sum of the present values of the remaining scheduled payments of principal and interest thereon that would have been due if the Notes matured on the Par Call Date, not including accrued and unpaid interest to, but not including, the redemption date, discounted to the redemption date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the applicable Treasury Yield (as defined in the Indenture) plus 25 basis points. On or after the Par Call Date, the Notes are redeemable, in whole, at any time, or in part, from time to time, at the Companys option, for cash, at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to, but not including, the redemption date.
Upon the occurrence of a Change of Control Triggering Event (as defined in the Indenture), unless the Company has exercised its right to redeem the Notes, each holder of Notes
will have the right to require the Company to repurchase all or a portion of such holders Notes, for cash, at a repurchase price equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, on the amount repurchased to, but not including, the date of repurchase.
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The Indenture contains covenants that limit the ability of the Company and each of its subsidiaries, as applicable to, among other things: (i) create certain liens on its assets to secure certain debt; (ii) enter into certain sale and leaseback transactions; and (iii) in the case of the Company, merge or consolidate with another company or transfer all or substantially all of the Companys property, in each case as set forth in the Indenture. These covenants are, however, subject to a number of important limitations and exceptions.
The Indenture also contains customary event of default provisions including, among others, the following: (i) default in the payment of principal of or premium, if any, on any Note when due at its maturity; (ii) default for 30 days in the payment when due of interest on the Notes; (iii)
failure to comply with the other covenants or agreements in the Indenture or the Notes and failure to cure or obtain a waiver of such default within 90 days following notice as described below; (iv) a default under any debt for money borrowed by the Company or any future subsidiary guarantor that results in acceleration of the maturity of such debt, or failure to pay any such debt within any applicable grace period after final stated maturity, in an aggregate amount greater than (a) $25.0 million, at any time that any Existing Notes remain outstanding, or (b) $100.0 million at any time that no Existing Notes remain outstanding, without such debt having been discharged or acceleration having been rescinded or annulled; and (v) certain events of bankruptcy, insolvency or reorganization with respect to the Company or any future subsidiary guarantor that is a Significant Subsidiary (as defined in the Indenture), in each case as set forth in the Indenture. In the case of an event of default, other than a default under clause (v) above, the Trustee or the holders of at least 25% in aggregate principal amount of the Notes then outstanding, by written notice to the Company (and to the Trustee if the notice is given by the holders of the Notes), may declare the principal of and accrued and unpaid interest, if any, on the Notes to be immediately due and payable. If an event of default under clause (v) above occurs, the principal of and accrued and unpaid interest, if any, on the Notes will be immediately due and payable without any act on the part of the Trustee or holders of the Notes.
The Trustee also serves as the trustee under the indentures for the Existing Notes.
The offering of the Notes was registered under the Securities Act of 1933, as amended, pursuant to the Companys shelf registration statement on Form S-3 which became automatically effective upon filing with Securities and Exchange Commission on
February 29, 2016 (File No. 333-209788).
The above description of the Indenture and the Notes does not purport to be complete and is qualified in its entirety by reference to the Base Indenture (which was previously filed) and the Second Supplemental Indenture (including the Form of Note included therein), attached as Exhibit 4.1 and referenced as Exhibit 4.2 hereto, respectively, and incorporated herein by reference.
In addition to the specific agreements and arrangements described above, from time to time, certain of the underwriters of the Notes and/or their respective affiliates have been, and may
in the future be, lenders under the Companys credit facility and have directly and indirectly engaged, and may engage in the future, in investment and/or commercial banking transactions with the Company for which they have received, or may receive, customary compensation and expense reimbursement.
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