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Proposed Spin Off Transaction (Notes)
9 Months Ended
Sep. 30, 2013
Restructuring and Related Activities [Abstract]  
Proposed Spin-Off Transaction
Proposed Spin-Off Transaction
In December 2012, the Company's Board of Directors announced a plan to spin off the commercial and residential security businesses. The separation will result in two stand-alone companies: Ingersoll-Rand plc; and Allegion plc, a leading global provider of electronic and mechanical security products and services, delivering comprehensive solutions to commercial and residential customers. This new company’s portfolio of brands will include Schlage®, Von Duprin®, LCN®, CISA®, and Interflex®.
The completion of the spin-off is subject to certain customary conditions, unless waived by Ingersoll Rand, including receipt of regulatory approvals; the receipt of a private letter ruling from the U.S. Internal Revenue Service (IRS) and opinions of tax counsel confirming that the distribution and certain transactions entered into in connection with the distribution generally will be tax-free to Ingersoll Rand and its shareholders for U.S. federal income tax purposes, except for cash received in lieu of fractional shares; execution of intercompany agreements; effectiveness of appropriate filings with the SEC; and final approval of the transactions contemplated by the spin-off, as may be required under Irish law. There can be no assurance that any separation transaction will ultimately occur, or, if one does occur, its terms or timing. The disclosures and financial statements within these condensed consolidated financial statements include the results of operations, financial position, and cash flows of the commercial and residential security businesses as continuing operations.
Upon completion of the spin-off, Allegion plc will hold the commercial and residential security businesses and will become an independent publicly traded company. Allegion plc is an Irish public limited company.
During the three and nine months ended September 30, 2013, the Company incurred $25.7 million and $57.7 million of professional service fees related to the proposed spin-off, respectively. These costs are reported in Selling and administrative expenses in the Condensed Consolidated Statements of Comprehensive Income.
Allegion Debt Structure
In relation to the proposed spin-off of our commercial and residential security businesses, our indirect, wholly owned subsidiary, Allegion US Holding Company Inc. (Allegion Holdings) expects to have approximately $1.3 billion of indebtedness at the time of the spin-off, the net proceeds of which will be distributed to IR-Ireland prior to the spin-off. In addition, Allegion Holdings expects to have a senior secured revolving credit facility permitting borrowings of up to $500 million.
Senior Notes
In October 2013, Allegion Holdings issued $300 million of its 5.75% senior notes due 2021. The senior notes accrue interest at the rate of 5.75% per annum, payable semi-annually on April 1 and October 1 of each year, commencing on April 1, 2014. The senior notes will mature on October 1, 2021. The proceeds from the issuance will be held in escrow until prior to the consummation of the spin-off, when the net proceeds will be distributed to the Company.
Senior Secured Term Loan Facilities
In September 2013, Allegion Holdings completed the syndication of $1 billion of senior secured term loan facilities. The Term Facilities consist of (i) a Term A Facility in an aggregate principal amount of $500 million due in 2018 and (ii) a Term B Facility in an aggregate principal amount of $500 million due in 2020 (the loans under such Term Facilities, the Term Loans). The net proceeds of the Term Loans will be drawn and distributed to the Company prior to the consummation of the spin-off.
The Company will not be a guarantor or obligor with respect to the Senior Notes, the Senior Secured Term Loan Facilities, or the Senior Secured Revolving Credit Facility.