Debt and Interest

9 Months Ended

Sep. 30, 2012

Debt and Interest

Debt and Interest

5.       Debt and Interest

	September 30			December 31
(millions)	2012			2011
	(unaudited)
Short-term debt
Commercial paper	$	560.3		$	916.1
Notes payable	64.9			100.3
Long-term debt, current maturities	5.8			6.6
Total	$	631.0		$	1,023.0
Long-term debt
Description / 2012 Principal Amount
Series A senior euro notes (125 million euro)	$	157.2		$	168.1
Series B senior euro notes (175 million euro)	220.1			235.3
Senior notes ($250 million)	249.3			249.1
Series A private placement senior notes ($250 million)	250.0			250.0
Series B private placement senior notes ($250 million)	250.0			250.0
Three year 2011 senior notes ($500 million)	499.8			499.7
Five year 2011 senior notes ($1.25 billion)	1,247.9			1,247.6
Ten year 2011 senior notes ($1.25 billion)	1,249.3			1,249.2
Thirty year 2011 senior notes ($750 million)	742.5			742.3
Three year 2012 senior notes ($500 million)	499.8			—
Nalco senior notes ($0)	—			838.7
Nalco senior euro notes ($0)	—			300.7
Nalco senior notes ($0)	—			558.5
Capital lease obligations	14.3			18.3
Other	12.3			12.3
Total debt	5,392.5			6,619.8
Long-term debt, current maturities	(5.8		)	(6.6		)
Total long-term debt	$	5,386.7		$	6,613.2

In January 2012, the company redeemed $1.7 billion of Nalco senior notes, which were assumed in 2011 as part of the merger. As part of the redemption, the company recognized an $18.2 million loss for debt extinguishment. As of December 31, 2011, the Nalco senior notes were fully and unconditionally guaranteed by certain Nalco subsidiaries. In conjunction with the redemption in January 2012, all guarantees in place as of December 31, 2011 were extinguished.

In April 2012, the company reduced its 364 day credit facility from $2.0 billion to $1.0 billion. In August 2012, the company replaced the $1.0 billion 364 day credit facility, which was to expire in September 2012, with a $500 million 364 day credit facility.

In August 2012, in a public offering, the company issued $500 million of debt securities that mature in 2015 at a rate of 1.00% (the “Public Notes”). The proceeds were used to refinance outstanding commercial paper and for general corporate purposes.

The Public Notes may be redeemed by the company at its option at a redemption price that includes accrued and unpaid interest and a make-whole premium. Upon the occurrence of a change in control accompanied by a downgrade of the Public Notes below investment grade rating, within a specified time period, the company will be required to offer to repurchase the Public Notes at a price equal to 101% of the aggregate principal amount thereof, plus any accrued and unpaid interest to the date of the repurchase. The Public Notes are senior unsecured and unsubordinated obligations of the company and rank equally with all other senior and unsubordinated indebtedness of the company.

Interest expense and interest income recognized during the third quarter and nine months ended 2012 and 2011 were as follows:

	Third Quarter Ended						Nine Months Ended
	September 30						September 30
(millions)	2012			2011			2012			2011
Interest expense	$	66.8		$	15.9		$	221.6		$	45.7
Interest income	(2.6		)	(2.7		)	(7.4		)	(5.9		)
Interest expense, net	$	64.2		$	13.2		$	214.2		$	39.8

The increase in interest expense was driven primarily by debt issued to fund the cash portion of the Nalco merger consideration, the repayment of Nalco debt and share repurchases. Interest expense for 2012 also includes an $18.2 million loss on extinguishment of Nalco debt, recognized in the first quarter.