(UTX) United Technologies Corportation Raises $2.25 Billion Debt

February 28th, 2010

United Technologies Corp (UTX) sold $2.25 billion in debt in a two-part sale. This includes $1.25 billion of 10-year notes priced to yield 87 basis points over comparable U.S. Treasuries and $1.0 billion of 30-year bonds priced to yield 109 basis points more than U.S. Treasuries.

The notes of each series will bear interest at the applicable rate and will accrue interest from the most recent date till which interest has been paid or duly provided for. Interest will be payable on the notes semiannually in arrears on April 1 and October 1 of each year, commencing on October 1, 2010.

The notes of each series will be redeemable, in whole or in part, at the option of the company at any time, at a redemption price in U.S. dollars equal to the greater of the following:

100% of the principal amount of the applicable series of notes to be redeemed; or
The sum of the present values of the remaining scheduled payments of principal and interest on the applicable series of notes to be redeemed, discounted to the redemption date on a semiannual basis, assuming a 360-day year consisting of twelve 30-day months.

The redemption price will also include interest accrued till the date of redemption on the principal balance of the notes being redeemed.

These net proceeds will be used primarily to fund the acquisition from General Electric Company (GE) of the GE Security business for a purchase price of approximately $1.8 billion pursuant to an agreement it entered into in November 2009 with General Electric.

Subject to the satisfaction of customary closing conditions, the closing is anticipated to take place late in the first quarter or early in the second quarter of 2010. GE Security, part of GE Technology Infrastructure, supplies security and fire safety technologies for commercial and residential applications through a broad product portfolio that includes fire detection and life safety systems, intrusion alarms, video surveillance and access control systems.

The remainder of the net proceeds from the offering of the notes, if any, will be used for general corporate purposes.

The underwriters for the issue are Banc of America Securities LLC, BNP Paribas Securities Corp., Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman, Sachs & Co., HSBC Securities (USA) Inc., J.P. Morgan Securities Inc. and RBS Securities Inc. Each underwriter, through its representatives, Banc of America Securities LLC and Citigroup Global Markets Inc., has severally agreed to purchase from the company the principal amount of notes.

United Technologies Corporation provides technology products and services to the building systems and aerospace industries worldwide. The company’s UTC Fire & Security segment offers electronic security products, such as intruder alarms, access control systems, and video surveillance systems; and fire safety products Incorporatedluding specialty hazard detection and fixed suppression products, portable fire extinguishers, and other firefighting equipment.

We currently have a Neutral recommendation on UTX.

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(UTX) United Technologies Corportation Raises $2.25 Billion Debt

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(UTX) United Technologies Corportation Raises $2.25 Billion Debt

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