CVS tenders for up to $6 billion notes under two sets of offers

By Marisa Wong

Los Angeles, Aug. 12 – CVS Health Corp. has begun cash tender offers for up to $3 billion principal amount of notes due 2023 from three series, including one issued by wholly owned subsidiary Aetna Inc., and up to $3 billion aggregate principal amount of notes due 2025 from two series, according to a press release.

Specifically, CVS is offering to purchase up to $3 billion of 2023 notes from the following series, with the notes listed in order of acceptance priority level:

• $1.25 billion outstanding 4% senior notes due 2023 (Cusip: 126650CC2) issued by CVS, with pricing based on the 0.125% U.S. Treasury due July 15, 2023 and a fixed spread of 20 basis points;

• $6 billion outstanding 3.7% senior notes due 2023 (Cusip: 126650CV0) issued by CVS, with pricing based on the 0.125% U.S. Treasury due July 15, 2023 and a fixed spread of 25 bps; and

• $1.3 billion outstanding 2.8% senior notes due 2023 (Cusip: 00817YAV0) issued by Aetna, with pricing based on the 0.125% U.S. Treasury due July 15, 2023 and a fixed spread of 25 bps.

Under the 2025 offers, CVS is offering to purchase up to $3 billion of notes from the following series, with the notes listed in order of acceptance priority level:

• $5 billion outstanding 4.1% senior notes due 2025 (Cusip: 126650CW8) issued by CVS, with pricing based on the 0.25% U.S. Treasury due July 31, 2025 and a fixed spread of 36 bps; and

• $2,828,067,000 outstanding 3.875% senior notes due 2025 (Cusip: 126650CL2) issued by CVS, with pricing based on the 0.25% U.S. Treasury due July 31, 2025 and a fixed spread of 43 bps.

The total consideration will include an early tender payment of $30 per $1,000 principal amount of notes tendered by 5 p.m. ET on Aug. 25, the early tender date. Holders tendering after the early deadline will only be eligible to receive the tender offer consideration, which is the total consideration less the early tender payment.

Pricing will be determined at 9 a.m. ET on Aug. 26.

Holders will also receive accrued interest to but excluding the applicable settlement date.

The offers expire at 11:59 p.m. ET on Sept. 9.

The settlement date for early tendered notes is expected to be Aug. 27. Settlement of notes tendered after the early deadline and accepted for purchase is expected to be Sept. 11.

The company said it may decide to reallocate the maximum amounts of the offers if the $3 billion maximum amount on one set of offers is not met while the $3 billion cap on the other set of offers is exceeded, provided that the sum of the 2023 notes cap and the 2025 notes cap does not exceed $6 billion.

Tenders may be withdrawn prior to 5 p.m. ET on Aug. 25.

The purpose of the tender offers is to refinance a portion of CVS Health’s debt and to lower its overall debt, according to the release.

Barclays (800 438-3242 or 212 528-7581), Goldman Sachs & Co. LLC (800 828-3182 or 212 902-6351) and J.P. Morgan Securities LLC (866 834-4666 or 212 834-8553) are dealer managers for the tender offers.

D.F. King & Co., Inc. (cvs@dfking.com, 212 269-5550 for banks and brokers only or 800 714-3305 for all others) is the tender and information agent.

The health care company is based in Woonsocket, R.I.

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