Item 1.01
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Entry Into a Material Definitive Agreement.
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On June 19, 2020, BorgWarner Inc. (BorgWarner or the Company) completed the public offering and issuance of
$1,100 million aggregate principal amount of its 2.650% Senior Notes due 2027 (the Notes). The Notes were sold pursuant to an Underwriting Agreement, dated June 16, 2020, between the Company and BofA Securities, Inc., Citigroup
Global Markets Inc. and Deutsche Bank Securities Inc., each acting on behalf of itself and the several underwriters named therein.
The
Notes are governed by an indenture, dated September 23, 1999, between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee (the Base Indenture), as supplemented by a Sixth Supplemental Indenture, dated
June 19, 2020 (the Sixth Supplemental Indenture and, together with the Base Indenture, the Indenture), between the Company and Deutsche Bank Trust Company Americas, as trustee for the Notes. Pursuant to the
Indenture, interest on the Notes will accrue at a rate of 2.650% per annum on the principal amount from June 19, 2020, payable semi-annually in arrears on January 1 and July 1 of each year, beginning on January 1, 2021. The Notes
will mature on July 1, 2027, unless redeemed prior thereto.
Prior to May 1, 2027 (two months prior to the maturity date of the
Notes), the Company may redeem the Notes at its option, in whole or in part, at any time at a redemption price equal to the redemption price set forth in the Notes, plus any accrued and unpaid interest on the Notes to the redemption date.
On or after May 1, 2027 (two months prior to the maturity date of the Notes), the Company may redeem the Notes at a redemption price
equal to 100% of the principal amount of the Notes being redeemed, plus accrued and unpaid interest on the Notes to the redemption date.
If a change of control repurchase event (as defined in the Indenture) occurs with respect to the Notes, unless the Company has exercised its
right to redeem the Notes, the Company will make an offer to each holder of the Notes to repurchase all or any part of that holders Notes at a purchase price in cash equal to 101% of the aggregate principal amount of such Notes repurchased
plus unpaid interest, if any, accrued thereon to, but excluding, the repurchase date.
The Notes will be the Companys general
unsecured and unsubordinated obligations and will rank equally in right of payment with all of its other existing and future unsecured and unsubordinated obligations. The Notes will be effectively subordinated to any of the Companys existing
or future secured debt to the extent of the value of the assets securing such debt and will be structurally subordinated to all existing and future liabilities and any preferred equity of the Companys subsidiaries.
The Indenture includes customary events of default, including, among other things, payment default, covenant default, certain defaults under
other indebtedness of the Company or certain of its subsidiaries and bankruptcy, insolvency or reorganization affecting the Company or certain of its subsidiaries.
This description of the Indenture is a summary and is qualified in its entirety by reference to the Base Indenture and the Sixth Supplemental
Indenture (including the form of Global Note attached as Exhibit A to the Sixth Supplemental Indenture), copies of which are filed as Exhibits 4.1 and 4.2, respectively, to this Current Report on Form 8-K and
incorporated by reference herein.
The Company intends to use the net proceeds from the sale of the Notes to redeem and/or repurchase
$250 million in aggregate principal amount of its outstanding 4.625% Senior Notes due September 15, 2020 and, upon the successful consummation of the proposed transaction (the Delphi Transaction) between the Company and Delphi
Technologies PLC (Delphi Technologies), to repay certain amounts outstanding under the $1,250 million senior secured credit facility of Delphi Technologies, with any remaining net proceeds being used for general corporate purposes.
If the Delphi Transaction is not consummated on or prior to April 28, 2021 or the Transaction Agreement, dated January 28,
2020, as amended on May 6, 2020, by and between the Company and Delphi Technologies relating to the Delphi Transaction, is terminated on or prior to April 28, 2021 (without replacement thereof), the Company will be required to redeem all
of the outstanding Notes at a redemption price equal to 101% of the principal amount of the Notes, plus accrued and unpaid interest to, but excluding, the applicable special mandatory redemption date.