UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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): March 11, 2011
Graco Inc.
(Exact name of registrant as specified in its charter)
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| Minnesota
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001-9249
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41-0285640 |
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(State or other jurisdiction
of incorporation)
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(Commission
File Number)
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(IRS Employer
Identification No.) |
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88-11th Avenue Northeast
Minneapolis, Minnesota
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55413 |
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(Zip Code) |
Registrant’s telephone number, including area code (612) 623-6000
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):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
TABLE OF CONTENTS
Item 1.01. Entry into a Material Definitive Agreement.
On March 11, 2011, Graco Inc. (the “Company”) entered into a Note Agreement (the “Note
Agreement”) with certain affiliates, investment funds or managed accounts of Prudential Investment
Management, Inc. (the “Purchasers”) and issued and sold $150 million in senior unsecured notes (the
“Series A/B Notes”) to the Purchasers in a private placement. The Note Agreement also provides for
the issuance and sale of an additional $150 million in senior unsecured notes (together with the
Series A/B Notes, the “Senior Notes”) on or before July 26, 2011. The Company plans to use the
proceeds for general corporate purposes.
The Senior Notes are in four series as follows:
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Aggregate Principal |
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Amount |
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Interest Rate |
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Maturity Date |
| A
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$75 million
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4.00%
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March 11, 2018 |
| B
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$75 million
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5.01%
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March 11, 2023 |
| C
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$75 million
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4.88%
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January 26, 2020 |
| D
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$75 million
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5.35%
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July 26, 2026 |
Interest on the Senior Notes is payable quarterly, starting on June 11, 2011 with respect
to the Series A/B Notes. The Company is required to pay the entire unpaid principal amount of each
series of Senior Notes on the maturity date set forth above for such series. The Company may make
optional prepayments of the Senior Notes, subject to certain limitations and the requirement to pay
an additional yield-maintenance amount in connection therewith. Upon a change of control, the
holders of the Senior Notes have the right to require the Company to prepay the Senior Notes,
including an additional yield-maintenance amount.
The Company is restricted in its borrowings and in general under the Note Agreement by certain
financial covenants. The Company is required to maintain a cash flow leverage ratio of not more
than 3.25 to 1.00 (unless a significant acquisition has been consummated during the period of the
four quarters ending with such fiscal quarter, in which case, not more than 3.75 to 1.00) and an
interest coverage ratio of not less than 3.00 to 1.00 (unless a significant acquisition has been
consummated during the period of the four quarters ending with such fiscal quarter, in which case,
not less than 2.50 to 1.00). The Note Agreement also contains covenants typical of unsecured credit
facilities. The Note Agreement includes customary default provisions that includes a default for
the Company’s default on other debt exceeding $25 million. In the event that the Company refinances
its existing senior credit facility and the financial covenants or the event of default for
defaults on other debt are more restrictive on the Company than the existing senior credit
facility, the Note Agreement shall be amended automatically to include such covenant or default.
If an event of default occurs, all outstanding obligations may become immediately due and payable.
The foregoing description of the Note Agreement and the Senior Notes does not purport to be
complete and is qualified in its entirety by reference to such documents, forms of which are filed
as Exhibit 10.1 hereto and are incorporated by reference in this Current Report on Form 8-K.