Item 1.01. Entry into a Material Definitive Agreement.
On May 13, 2009, Wyndham Worldwide Corporation ("Wyndham Worldwide") entered
into two underwriting agreements (each, an "Underwriting Agreement") for the
issuance of (i) $250 million aggregate principal amount of 9.875% senior
unsecured notes due 2014 (the "Senior Notes"),with Banc of America Securities
LLC, Credit Suisse Securities (USA) LLC, J.P. Morgan Securities Inc., Citi
Global Markets Inc. and Deutsche Bank Securities Inc. and the several
underwriters named therein, and (ii) $230 million aggregate principal amount of
convertible notes due 2012 (the "Convertible Notes," and together with the
Senior Notes, the "Notes"), with Credit Suisse Securities (USA) LLC, J.P. Morgan
Securities Inc., Citi Global Markets Inc., Merrill Lynch Pierce, Fenner & Smith
Incorporated and Deutsche Bank Securities Inc. and the several underwriters
named therein. Wyndham Worldwide issued the Senior Notes on May 18, 2009 and the
Convertible Notes on May 19, 2009 pursuant to its effective shelf registration
statement on Form S-3 (File No. 333-155676), as filed with the Securities and
Exchange Commission on November 25, 2008 (the "Registration Statement"). The
terms of the Notes are governed by an indenture, dated November 20, 2008 between
Wyndham Worldwide and U.S. Bank National Association, as trustee (the "Base
Indenture"), and, with respect to the Senior Notes, the first supplemental
indenture thereto, dated May 18, 2009 and, with respect to the Convertible
Notes, the second supplemental indenture thereto, dated May 19, 2009 (each,
together with the Base Indenture, the "Indenture").
The Senior Notes bear interest at a rate of 9.875% per year payable
semi-annually in arrears on May 1 and November 1 of each year, commencing
November 1, 2009. The interest rate payable on the Senior Notes is subject to
adjustment from time to time if either Moody's Investor Service or Standard and
Poor's, or, in either case, any substitute rating agency, downgrades (or
downgrades and subsequently upgrades) the debt ratings assigned to the Senior
Notes. The Senior Notes are redeemable at any time prior to maturity at a
redemption price equal to the sum of the principal being redeemed, accrued and
unpaid interest and a "make-whole" premium specified in the Senior Notes. If
Wyndham Worldwide experiences a change of control, Wyndham Worldwide is required
to offer to repurchase the Senior Notes at 101% of their principal amount plus
accrued and unpaid interest, if any, to the date of purchase.
The Convertible Notes bear interest at a rate of 3.50% per year payable
semi-annually in arrears on May 1 and November 1 of each year, commencing
November 1, 2009. The Convertible Notes are not convertible into shares of
Wyndham Worldwide common stock or any other securities under any circumstances.
Under certain circumstances and during certain periods, the Convertible Notes
may be converted into cash at an initial conversion rate of 78.5423 shares of
common stock per $1,000 principal amount of Convertible Notes, equivalent to a
conversion price of approximately $12.73 per share of Wyndham Worldwide common
stock. The conversion price represented a premium of approximately 20% to the
closing price of Wyndham Worldwide's common stock on the New York Stock Exchange
on May 13, 2009, the date of pricing.
Wyndham Worldwide entered into (i) convertible note hedge transactions that
are expected to offset its exposure to any cash payments above par value that
may be required upon conversion of any Convertible Notes, and (ii) warrant
transactions, which Wyndham Worldwide will have the option to settle in net
shares or cash (the "Warrants"). The exercise price of the Warrants
(approximately $20.16 per share) represented a premium of approximately 90% to
the closing price of Wyndham Worldwide's common stock on the New York Stock
Exchange on May 13, 2009, the date of pricing.
The Indentures contain customary provisions for events of default including
for failure to pay principal or interest when due and payable, failure to comply
with covenants or agreements in the Indentures or the Notes and failure to cure
or obtain a waiver of such default upon notice, a default under other debt of
Wyndham Worldwide or certain of its subsidiaries such that at least $50 million
aggregate principal amount of indebtedness is accelerated which acceleration has
not been rescinded or annulled within 30 days of notice, and events of
bankruptcy, insolvency or reorganization affecting Wyndham Worldwide and certain
of its subsidiaries. In the case of an event of default, the principal amount of
the Notes plus accrued and unpaid interest may be accelerated.
The description of the Notes and the Indentures in this report are summaries
and are qualified in their entirety by the terms of the Indentures and the forms
of the Notes included therein. The Base Indenture was filed with the SEC as
Exhibit 4.2 to the Registration Statement. The Underwriting Agreements, first
and second supplemental indentures, the forms of Senior Notes and Convertible
Notes, and each hedge and warrant transaction agreement are filed as exhibits
hereto and are incorporated by reference herein.
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