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`8-K 1 d413149d8k.htm FORM 8-K
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`UNITED STATES
`SECURITIES AND EXCHANGE COMMISSION
`WASHINGTON, D.C. 20549
`
`FORM 8-K
`
`CURRENT REPORT
`Pursuant to Section 13 or 15(d)
`of the Securities Exchange Act of 1934
`
`Date of Report (Date of Earliest Event Reported): August 1, 2016
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`Symantec Corporation
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`(Exact Name of Registrant as Specified in Charter)
`
`Delaware
`(State or Other Jurisdiction
`of Incorporation)
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`000-17781
`(Commission
`File Number)
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`350 Ellis Street, Mountain View, CA
`(Address of Principal Executive Offices)
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`77-0181864
`(IRS Employer
`Identification No.)
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`94043
`(Zip Code)
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`Registrant’s Telephone Number, Including Area Code (650) 527-8000
`
`Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the
`registrant under any of the following provisions (see General Instruction A.2. below):
`(cid:133) Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
`(cid:133) Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
`(cid:133) Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
`(cid:133) Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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`Form 8-K
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`Page 2 of 6
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`Item 1.01 Entry into a Material Definitive Agreement.
`Indenture
`As previously reported, Symantec Corporation (the “Company” or “Symantec”) entered into an investment agreement (the
`“Investment Agreement”) with Bain Capital Fund XI, L.P. and Bain Capital Europe Fund IV, L.P. (collectively, “Bain”)
`and Silver Lake Partners IV Cayman (AIV II), L.P. (“Silver Lake”, and together with Bain and their respective designated
`affiliates, the “Purchasers”), relating to the issuance to the Purchasers of $1.25 billion aggregate principal amount of 2.0%
`convertible unsecured notes due 2021 (the “Notes”). The sale of the Notes pursuant to the Investment Agreement was
`completed on August 1, 2016 (the “Investment Agreement Closing”). In connection with the Investment Agreement
`Closing, the Company and Wells Fargo Bank, National Association (the “Trustee”) entered into an indenture dated as of
`August 1, 2016 (the “Indenture”) pursuant to which the Notes were issued to affiliates of the Purchasers.
`
`The Notes bear interest at a rate of 2.00% per annum, payable semiannually in arrears in cash on February 15 and
`August 15 of each year, beginning on February 15, 2017. The Notes will mature on August 15, 2021 (the “Maturity Date”)
`subject to earlier conversion.
`
`The Notes are convertible into cash, shares of Common Stock or a combination of cash and Common Stock, at the
`Company’s option, at any time prior to the close of business on the scheduled trading day immediately preceding the
`Maturity Date, at an initial conversion rate of 48.9860 per $1,000 principal amount of the Notes (which represents an
`initial conversion price of $20.414 per share), in each case subject to certain adjustments determined in the manner set
`forth in the Indenture. Holders of Notes that are converted in connection with a Make-Whole Fundamental Change, as
`defined in the Indenture, are, under certain circumstances, entitled to an increase in the conversion rate for such Notes
`based on the effective date of such event and the applicable price attributable to the event as set forth in a table contained
`in the Indenture. The definition of Make-Whole Fundamental Change includes a sale of substantially all the Company’s
`assets, a change of the control of the Company by way of a tender offer, merger or similar event, and the adoption of a
`plan relating to the Company’s liquidation or dissolution.
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`With certain exceptions, upon a change of control of the Company, the holders of the Notes may require that the Company
`repurchase all or part of the principal amount of the Notes at a purchase price equal to the principal amount plus accrued
`and unpaid interest.
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`The Notes are senior unsecured obligations of the Company and rank equal in right of payment to all senior unsecured
`indebtedness of the Company, and will rank senior in right of payment to any indebtedness that is contractually
`subordinated to the Notes.
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`The Indenture includes customary events of default. If an event of default, as defined in the Indenture, occurs and is
`continuing, either the trustee or the holders of at least 25% in aggregate principal amount of the Notes then outstanding
`may, subject to certain exceptions provided in the Indenture, declare 100% of the principal of, and accrued and unpaid
`interest through the date of such declaration on, all the Notes to be immediately due and payable in full. In the case of
`certain events of bankruptcy or insolvency, the principal amount of the Notes and any unpaid interest accrued thereon
`through the occurrence of such event shall automatically become and be immediately due and payable.
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`The foregoing description of the Indenture and the Notes is qualified in its entirety by reference to the Indenture and the
`form of Note, which will be filed as exhibits to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter
`ending July 1, 2016.
`
`Term Loan Agreement
`On August 1, 2016 (the “Closing Date”), Symantec entered into a Term Loan Agreement, by and among the Company, the
`administrative agent and the financial institutions party thereto as lenders, that provides for a 3-year term loan facility in
`an aggregate principal amount of $200 million (the “Term A-3 Facility”) and a 5-year term loan facility in an aggregate
`principal amount not to exceed $1.8 billion (the “Term A-5 Facility,” and collectively with the Term A-3 Facility, the
`“Term Loan Agreement”). At the closing, the Company borrowed the full amounts available under the Term A-3 Facility
`and the Term A-5 Facility to be used to, among other things, fund the cash consideration for the acquisition of Blue Coat,
`Inc. and pay transaction-related expenses. The borrowing of the loans under the Term Loan Agreement on the Closing
`Date shall be subject to limited conditionality customary in acquisition financings.
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`The loans under the Term Loan Agreement bear interest, at the Company’s option, at either a rate equal to (x) the bank’s
`base rate plus a margin based on the debt rating of the Company’s non-credit-enhanced, senior unsecured long-term debt
`(the “Alternate Base Rate”), or (y) LIBOR plus a margin based on the debt rating of the Company’s non-credit-enhanced,
`senior unsecured long-term debt (the “Adjusted LIBO Rate”). Under the Term Loan Agreement, the Company may select
`an interest period of one, two, three or six months for each loan if the Adjusted LIBO Rate is chosen (or, with the consent
`of each Lender, a shorter period or twelve months).
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`Payments of the principal amounts of loans under the Term A-3 Facility are due no later than August 1, 2019 (the “Term
`A-3 Maturity Date”) and loans under the Term A-5 Facility are due no later than August 1, 2021 (the “Term A-5 Maturity
`Date”), in each case subject to extension as provided for in the Term Loan Agreement. The Company may prepay loans
`under the Term Loan Agreement at any time at its option, without penalty, subject to reimbursement of certain costs in the
`case of borrowings that bear interest at the Adjusted LIBO Rate. Amounts borrowed under the Term Loan Agreement may
`not be reborrowed once repaid.
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`The Term Loan Agreement contains customary representations and warranties, affirmative and negative covenants,
`including a covenant that the Company maintain a ratio of consolidated funded debt to consolidated EBITDA that is less
`than a stated maximum of 5.50:1.00 as of the Closing Date, decreasing to 4.75:1.00 24 months after the Closing Date. In
`addition, the Term Loan Agreement contains customary events of default (subject in certain instances to the Company’s
`right to cure) under which the Company’s payment obligations may be accelerated and the interest rate applicable to any
`borrowings under the Term Loan Agreement will increase by 200 basis points, including, among others, non-payment of
`principal, interest or other amounts when due, inaccuracy of representations and warranties, violation of certain covenants,
`payment and acceleration cross defaults with certain other indebtedness, certain undischarged judgments, bankruptcy,
`insolvency or inability to pay debts, the occurrence of certain ERISA events, and the Company experiencing a change of
`control described in the Term Loan Agreement.
`
`The Company’s obligations under the Term Loan Agreement are guaranteed by certain of the Company’s U.S.
`subsidiaries pursuant to a Guaranty attached to the Term Loan Agreement. In addition, at the Company’s option, the loans
`under the Term Loan Agreement may be assumed by a foreign subsidiary designated by the Company in accordance with
`the Term Loan Agreement (the “Successor Borrower”). Upon such assumption, the Company will guarantee the Successor
`Borrower’s obligations under the Term Loan Agreement by becoming a party to the Guaranty and certain foreign
`subsidiaries of the Successor Borrower will provide subsidiary guarantees to the Successor Borrower’s obligations under
`the Term Loan Agreement.
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`In the ordinary course of their respective businesses, certain of the Lenders and the other parties to the Term Loan
`Agreement and their respective affiliates have engaged, and may in the future engage, in commercial banking, investment
`banking, financial advisory or other services with the Company and its affiliates for which they have in the past and/or
`may in the future receive customary compensation and expense reimbursement.
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`The foregoing description of the Term Loan Agreement is qualified in its entirety by reference to the Term Loan
`Agreement, which will be filed as exhibits to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ending
`July 1, 2016.
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`Item 2.01 Completion of Acquisition or Disposition of Assets.
`On August 1, 2016, the Company completed the previously-announced acquisition of Blue Coat, Inc. (“Blue Coat”) a
`Delaware corporation (the “Merger Closing”), pursuant to the terms of that certain Agreement and Plan of Merger
`(“Merger Agreement”) dated as of June 12, 2016, by and between the Company, S-B0616 Merger Sub, Inc., a Delaware
`corporation and wholly owned subsidiary of the Company, and Blue Coat. Under the terms of the Merger Agreement, the
`Company acquired all of the outstanding capital stock of Blue Coat for an aggregate purchase price of $4.65 billion. The
`net consideration consisted of $3.01 billion in cash and the Company’s assumption of certain liabilities of Blue Coat.
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`The Company funded the cash consideration and the payment of transaction-related expenses through the proceeds from
`debt financings, including (1) proceeds drawn under the Amended and Restated Credit Agreement (as defined below),
`(2) proceeds drawn under the Term Loan Agreement and (3) proceeds from the issuance of the Notes.
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`The foregoing description of the merger and the Merger Agreement does not purport to be complete and is qualified in its
`entirety by reference to the full text of the Merger Agreement, a copy of which was filed as Exhibit 2.1 to the Company’s
`Current Report on Form 8-K filed with the Securities and Exchange Commission (“SEC”) on June 14, 2016, incorporated
`herein by reference.
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`As previously disclosed, the Company entered into an amendment agreement, dated July 18, 2016, by and among the
`Company, the guarantor, the administrative agent and the financial institutions party thereto as lenders, pursuant to which
`the company’s existing Credit Agreement was to be amended and restated, which amended and restated credit agreement
`(the “Amended and Restated Credit Agreement”) became operative upon the Merger Closing. Additional information
`regarding the amendment agreement and the Amended and Restated Credit Agreement are disclosed under Item 1.01 of
`the Company’s Current Form 8-K filed with the SEC on July 20, 2016 and such information is incorporated herein by
`reference. The description of the amendment agreement and the Amended and Restated Credit Agreement are qualified in
`their entirety by reference to the full text of the amendment agreement and the Amended and Restated Credit Agreement,
`which will be filed as exhibits to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended July 1, 2016.
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`Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of
`the Registrant
`The information contained in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
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`Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers;
`Compensatory Arrangements of Certain Officers
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`(d)
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`Appointment of Executive Officers
`Consistent with prior disclosures, on August 1, 2016, Gregory Clark became the Company’s Chief Executive Officer and
`member of the Board and Michael A. Brown ceased serving as the Chief Executive Officer and member of the Board of
`the Company. In addition, Michael Fey became the Company’s President and Chief Operating Officer. For a description
`of Mr. Clark’s employment arrangement, please refer to Item 5.02 of the Company’s Current Form 8-K filed with the SEC
`on June 14, 2016 (under the caption “Mr. Clark’s Employment Agreement”), the content of which is incorporated by
`reference herein. For description of Mr. Fey’s offer letter please refer to Item 5.02 of the Company’s Current Form 8-K
`filed with the SEC on July 11, 2016 (under the caption “Mr. Fey’s Offer Letter”), the content of which is incorporated by
`reference herein.
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`In addition to the employment arrangements previously disclosed, prior to the Merger Closing, Blue Coat granted
`Mr. Clark a combination of restricted stock units (“RSUs”) and performance-based restricted stock units (“PRUs”) equal
`to $8,767,000 in value on the date of grant (the “Clark Equity Award”) and granted Mr. Fey a combination of RSUs and
`PRUs equal to $5,901,000 in value on the date of grant (the “Fey Equity Award”). Upon the Merger Closing, the Clark
`Equity Awards and the Fey Equity Awards were converted into Company RSUs and PRUs based on the equity exchange
`ratio in the Merger Agreement. The Clark Equity Awards are subject to the same vesting and acceleration provisions as
`the 2017 equity awards previously described in the Item 5.02 of the Company’s Current Report on Form 8-K filed with the
`SEC on June 14, 2016. The Fey Equity Awards are subject to the same vesting and acceleration provisions as the equity
`awards previously described in the Item 5.02 of the Company’s Current Report on Form 8-K filed with the SEC on
`July 11, 2016.
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`In addition Mr. Fey amended his reinvestment agreement to exclude certain of his vested options to purchase Blue Coat’s
`common stock having an aggregate spread value of approximately $1.5 million from the transfer and re-vesting
`requirements in the reinvestment agreement.
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`Appointment of Director
`Consistent with prior disclosures, on August 1, 2016, David Humphrey, a managing director of Bain, was appointed to the
`Board as an independent director. For description of Mr. Humphrey appointment arrangement, please refer to Item 5.02
`the Company’s Current Form 8-K filed with the SEC on June 14, 2016 (under the caption “Appointment of Director”), the
`content of which is incorporated by reference herein.
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`Item 9.01 Financial Statements and Exhibits.
`(a)
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`The audited consolidated financial statements and unaudited interim condensed consolidated financial statements required
`to be filed under Item 9.01(a) of this Current Report on Form 8-K will be filed by amendment to this Current Report on
`Form 8-K no later than 71 days after the date on which this Current Report on Form 8-K is required to be filed.
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`(b)
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`The pro forma financial information required to be filed under Item 9.01(b) of this Current Report on Form 8-K will be
`filed by amendment to this Current Report on Form 8-K no later than 71 days after the date on which this Current Report
`on Form 8-K is required to be filed.
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`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.
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`SIGNATURE
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`Date: August 1, 2016
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`Symantec Corporation
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`By: /s/ SCOTT C. TAYLOR
`Scott C. Taylor
`Executive Vice President, General Counsel
`and Secretary
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