Donaldson Company has arranged a private placement of $250 million in senior unsecured notes, adding long-term debt rather than raising equity. The notes are expected to be issued on Jan. 12, 2027, in three tranches with interest rates ranging from 5.93% to 6.23%.
The agreement also provides for the possible issuance of up to $1.5 billion of notes in total, in one or more series. The announced $250 million is the initial series; the agreement does not say that the remaining amount has been issued.
Key details
- Three maturities: Donaldson plans to issue $125 million of 5.93% notes due Jan. 12, 2032; $75 million of 6.10% notes due Jan. 12, 2034; and $50 million of 6.23% notes due Jan. 12, 2037.
- Interest payments: Interest is payable twice a year, in January and July, and principal is due at maturity.
- Debt terms: The notes are senior unsecured obligations. The agreement includes financial and other restrictions, including covenants addressing debt relative to EBITDA, priority debt, liens, asset sales and mergers. It also sets out default events—including missed payments, covenant violations and defaults on other debt—that can allow the notes’ maturity to be accelerated.
- Early repayment: Donaldson may repay all or part of the notes, subject to the agreement’s terms. A partial repayment must be at least 10% of the notes then outstanding and generally requires payment of accrued interest and a make-whole amount.
- Change of control: If a defined change of control occurs, Donaldson must offer to repay all outstanding notes at their principal amount plus accrued interest.
Plain-English implications
The initial issuance will increase Donaldson’s debt and create interest and repayment obligations extending from 2032 to 2037. Because the notes are unsecured, they are not backed by specific collateral. The change-of-control provision gives noteholders an opportunity to seek repayment if control of the company changes.