Published on 10/5/2015 in the Prospect News Investment Grade Daily and Prospect News Liability Management Daily.
GE Capital prices private exchange offers for 123 series of notes
By Marisa Wong
Morgantown, W.Va., Oct. 5 General Electric Capital Corp. announced pricing for newly formed finance subsidiary GE International Funding Co.s private offers to exchange new notes for outstanding debt securities.
Pricing for the market value exchange offers was determined at 11 a.m. ET on Oct. 5, according to a press release. Exact pricing terms are listed in one of the tables below.
Earlier on Monday, GE Capital announced that investors had tendered about $53.9 billion of 123 series of notes by 5 p.m. ET on Oct. 2, the early tender date.
GE Capital also lifted the principal amount of new notes to be issued in the exchange offers to $36 billion from $30 billion, the amount of 2016 new notes to $16.25 billion from $15 billion and the amount of new market notes to be issued in the 2020/2025/2035 exchange offers to $36 billion less the principal amount of 2016 new notes accepted, according to an earlier press release.
Based on the tally so far, the company said it will accept all of the notes tendered in the 2016 market value exchange offers without proration. No notes tendered in the par-for-par exchange offers will be accepted.
The exchange offers will end at 11:59 p.m. ET on Oct. 19.
Tendered notes may no longer be withdrawn as of 5 p.m. ET on Oct. 2.
GE International Funding began the exchange offers on Sept. 21.
There were 123 series or tranches of old notes that could be tendered in one or more of the exchange offers, which included market value exchange offers and par-for-par exchange offers, detailed in the tables below.
The market value exchange offers consist of offers to exchange old notes for new notes with either a six-month, five-year, 10-year or 20-year maturity. In the market value exchange offers, the total exchange amount consists of new market notes.
The par-for-par exchange offers consisted of offers to exchange old notes for new notes in the same principal amount and with the same currency, maturity, interest rates and other payment terms as the old notes tendered. In the par-for-par offers, the total exchange amount included an additional cash payment.
Each series of old notes could have been tendered in the par-for-par offers. In addition, most series could also have been tendered in one or two of the market value offers.
For each tender of old notes, holders had to elect a single exchange offer, i.e., the same notes could not be tendered in more than one exchange offer at the same time.
Tender results
Holders had tendered the following amounts by the early deadline for a hypothetical new notes issue amount as follows:
$14.2 billion of 2016 dollar notes for $15 billion of new notes;
£600 million of 2016 sterling notes for £700 million of new notes;
$7.6 billion of 2020 notes for $6.3 billion of new notes;
$2.6 billion of 2025 notes for $2 billion of new notes; and
$11.8 billion of 2035 notes for $11.6 billion of new notes.
Exchange summary
The company offered to exchange the following $56.7 billion of old notes for new six-month fixed-rate notes:
$16.7 billion of eight dollar notes due 2019 to 2021;
$5.5 billion of three dollar notes due 2022 to 2024;
$22.7 billion of 19 dollar fixed-rate notes due 2016 to 2020;
$6.5 billion of 10 dollar floating-rate notes due 2016 to 2020;
$1.8 billion of four other dollar-denominated notes; and
$3.6 billion of five sterling-denominated notes.
The company also offered to swap out the following $39.5 billion of notes in the 2020/2025/2035 market value offer:
$16.7 billion of eight dollar notes due 2019 to 2021 for new five-year fixed-rate notes;
$5.5 billion of three dollar notes due 2022 to 2024 for new 10-year fixed-rate notes; and
$17.44 billion of dollar notes due 2032 to 2039 for new 20-year fixed-rate notes.
Offer details
The exchange offers are subject to the following limitations:
The aggregate principal amount of new notes that may be issued is $36 billion, increased from $30 billion;
The aggregate principal amount of 2016 new notes that may be issued in the 2016 market value exchange offers is now $16.25 billion, up from $15 billion;
The aggregate principal amount of new market notes that may be issued in the 2020/2025/2035 market value offers is $36 billion less the principal amount of 2016 new notes accepted, revised from $30 billion less the aggregate principal amount of any 2016 new notes issued in the 2016 market value exchange offers; and
The aggregate principal amount of new par notes that may be issued in the par-for-par exchange offers was $30 billion less the aggregate principal amount of any new notes issued in the market value exchange offers.
Old notes tendered in the exchange offers will be accepted in the following order of priority:
First, in the 2016 market value exchange offers, on a pro rata basis subject to the 2016 new notes cap;
Second, in the 2020/2025/2035 market value exchange offers, on a pro rata basis subject to the 2020/2025/2035 new notes cap; and
Third, in the par-for-par exchange offers, subject to the par-for-par cap (in order of the acceptance priority level of each series, listed in the table below).
To receive the total exchange amount, holders needed to tender their notes by the early tender deadline.
Holders who tender notes after the early deadline will receive the exchange value, or the total exchange value less $50, or 50 units of the applicable currency.
The issuer will also pay accrued interest on old notes to, but excluding, the settlement date.
There is no cash tender offer or consent solicitation being conducted in connection with the exchange offers. There is no overall minimum condition for the aggregate principal amount of new notes to be issued in the offers.
The settlement date of the Regulation S offers is expected to be Oct. 26.
Holders of old notes denominated in dollars who wish to confirm their eligibility to participate in the exchange offers and to receive a copy of the offer may contact D.F. King & Co., Inc. at 212 269-5550 for bankers and brokers, 866 388-7535, +44 (0) 207 920 9700 or ge@dfking.com. Holders of old notes denominated in a currency other than dollars who wish to confirm their eligibility to participate and to receive a copy of the offer may contact Lucid Issuer Services Ltd. at +44 (0) 207 704 0880 (toll) or ge@lucid-is.com.
Background
On April 10 General Electric Co. announced a plan to reduce the size of its financial services businesses through the sale of most of the assets of GE Capital and to focus on continued investment and growth in its industrial businesses. This exit plan involves a merger of GE Capital with and into GE.
The merger is part of a reorganization of GE Capitals businesses. The reorganization and exchange offers are intended, among other things, to establish an international holding company (GE Capital International Holdings) with an efficient and simplified capital structure. In addition, the exchange offers seek to align the liabilities of GE Capital International to its assets from a maturity profile and liquidity standpoint.
GE International Funding, the issuer of the new notes, is a newly formed finance subsidiary of GE Capital, but upon the completion of the reorganization it will become a subsidiary of GE Capital International Holdings.
The new notes will be guaranteed by GE, and the old notes will subsequently be assumed by GE in connection with the merger. The new notes initially will also be guaranteed by GE Capital, and upon completion of the reorganization, GE Capital International will assume the guarantee.
The exchange offers are not conditioned on the completion of the reorganization.
GE is a Fairfield, Conn.-based industrial manufacturer.
Pricing for new market notes
| New notes | Reference security | Fixed spread (bps) | Coupon
|
| 2016 dollar notes | Eurodollar Synthetic Forward Rate | 60 | 0.964%
|
| 2016 sterling notes | 2% Gilt due Jan. 22, 2016 | 90 | 1.363%
|
| 2020 notes | 1.375% Treasury due Aug. 31, 2020 | 105 | 2.342%
|
| 2025 notes | 2% Treasury due Aug. 15, 2025 | 135 | 3.373%
|
| 2035 notes | 3% Treasury due May 15, 2045 | 155 | 4.418%
|
|
|
| Exchange details
|
| 2016 market value exchange offers
|
| 2019-2021 market value exchange for 2016 dollar new notes
|
| Old notes | Tendered amount | New issue | Spread over Treasury (bps)
|
| $2 billion 6% Aug. 2019 | $232,925,000 | $269,897,000 | 5
|
| $2 billion 2.2% Jan. 2020 | $395,178,000 | $403,781,000 | 5
|
| $2 billion 5.5% Jan. 2020 | $227,268,000 | $261.12 million | 20
|
| $1.1 billion 5.55% May 2020 | $156,803,000 | $180,748,000 | 40
|
| $2.15 billion 4.375% Sept. 2020 | $199,154,000 | $220,575,000 | 45
|
| $2.25 billion 4.625% Jan. 2021 | $259,737,000 | $291,848,000 | 50
|
| $2 billion 5.3% Feb. 2021 | $206,400,000 | $237,067,000 | 70
|
| $3.15 billion 4.65% Oct. 2021 | $619,334,000 | $696,429,000 | 80
|
| All to be exchanged for 2016 dollar new notes due April 15, 2016 with 0.964% coupon.
|
| Total includes a $50 per $1,000 early participation payment.
|
| 5.3% notes due February 2021 are subordinated notes but will be exchanged for senior notes.
|
|
|
| 2022-2024 market value exchange for 2016 dollar new notes
|
| Old notes | Tendered amount | New issue | Spread (bps)
|
| $2 billion 3.15% Sept. 2022 | $250,532,000 | $259,441,000 | 30
|
| $2.5 billion 3.1% Jan. 2023 | $289,711,000 | $298,567,000 | 35
|
| $1 billion 3.45% May 2024 | $127,385,000 | $133,181,000 | 55
|
| All to be exchanged for 2016 dollar new notes due April 15, 2016 with 0.964% coupon.
|
| Total includes a $50 per $1,000 early participation payment.
|
|
|
| Fixed-rate 2016-2020 market value exchange for 2016 dollar new notes
|
| Old notes | Tendered amount | New issue | Treasury | Spread (bps)
|
| $1.25 billion 1.5% July 2016 | $422,462,000 | $426.67 million | 0.625% Aug. 2017 | Negative 70
|
| $250 million 1.45% Aug. 2016 | $0 | $0 | 0.625% Aug. 2017 | Negative 70
|
| $100 million 4.575% Aug. 2037 | $0 | $0 | 0.625% Aug. 2017 | Negative 75
|
| $1.25 billion 3.35% Oct. 2016 | $515,411,000 | $531,992,000 | 0.625% Aug. 2017 | Negative 75
|
| $1.1 billion 5.375% Oct. 2016 | $459,997,000 | $483,139,000 | 0.625% Aug. 2017 | Negative 55
|
| $1,425,000,000 | 2.9% Jan. 2017 | $624,169,000 | $644.03 million | 0.625% Aug. 2017 | Negative 55
|
| $1.5 billion 5.4% Feb. 2017 | $641,111,000 | $681.86 million | 0.625% Aug. 2017 | Negative 30
|
| $500 million 2.45% March 2017 | $328,546,000 | $337,157,000 | 0.625% Aug. 2017 | Negative 25
|
| $1 billion 1.25% May 2017 | $642,521,000 | $651,439,000 | 0.625% Aug. 2017 | Negative 50
|
| $2 billion 2.3% April 2017 | $844,784,000 | $868,176,000 | 0.625% Aug. 2017 | Negative 35
|
| $3 billion 5.625% Sept. 2017 | $1,152,329,000 | $1,256,211,000 | 0.625% Aug. 2017 | 0
|
| $1 billion 1.6% Nov. 2017 | $271,424,000 | $275,311,000 | 0.625% Aug. 2017 | 10
|
| $1.5 billion 1.625% April 2018 | $379,951,000 | $384,571,000 | 1% Sept. 2018 | 0
|
| $4 billion 5.625% May 2018 | $1,393,870,000 | $1,543,697,000 | 1% Sept. 2018 | 15
|
| $750 million 4.7% May 2053 | $288,000 | $294,000
|
| $1 billion 2.3% Jan. 2019 | $530,844,000 | $543,266,000 | 1.375% Aug. 2020 | Negative 5
|
| $700 million 3.8% June 2019 | $436,838,000 | $467.5 million | 1.375% Aug. 2020 | 20
|
| $75 million 5.26% Nov. 2019 | $75 million | $83,865,000 | 1.375% Aug. 2020 | 60
|
| $250 million 3.25% Aug. 2020 | $0 | $0 | 1.375% Aug. 2020 | 65
|
| All to be exchanged for 2016 dollar new notes due April 15, 2016 with a 0.964% coupon.
|
| For 3.8% notes due June 2019, the issuer is GE Capital and formerly included LJ VP Holdings LLC (JV Penske), an affiliate of GE Capital, as co-issuer.
|
| For 4.7% notes due May 2053, the price is fixed at $1,020 per $1,000 principal amount.
|
| Total includes a $50 per $1,000 early participation payment.
|
|
|
| Floating-rate 2016-2020 market value exchange for 2016 dollar new notes
|
| Old notes | Tendered amount | New issue | Price
|
| $695 million floaters July 2016 | $396 million | $399.96 million | $1,010.00
|
| $1.6 billion floaters July 2016 | $462.93 million | $468,717,000 | $1,012.50
|
| $2 billion floaters Jan. 2017 | $667.64 million | $674.316,000 | $1,010.00
|
| $500 million floaters May 2017 | $221,644,000 | $223.86 million | $1,010.00
|
| $100 million floaters May 2017 | $11,965,000 | $12,234,000 | $1,022.50
|
| $100 million floaters Aug. 2017 | $16,911,000 | $17,418,000 | $1,030.00
|
| $100 million floaters Dec. 2017 | $5.5 million | $5,569,000 | $1,012.50
|
| $400 million floaters April 2018 | $179,141,000 | $182,724,000 | $1,020.00
|
| $500 million floaters Jan. 2019 | $205,343,000 | $206,883,000 | $1,007.50
|
| $500 million floaters Jan. 2020 | $149,426,000 | $152,041,000 | $1,017.50
|
| All to be exchanged for 2016 dollar new notes due April 15, 2016 with a 0.964% coupon.
|
| F-FRNs are fixed to floating-rate notes.
|
| Total includes a $50 per $1,000 early participation payment.
|
|
|
| Other dollar market value exchange for 2016 dollar new notes
|
| Old notes | Tendered amount | Treasury | Spread (bps) | New issue
|
| $300 million 1.25% Nov. 2016 | $16.62 million | 0.625% Aug. 2017 | Negative 45 | $16.78 million
|
| $700 million 4.625% Jan. 2043 | $61,193,000 | 1% Sept. 2018 | 360 | $61,069,000
|
| $500 million 5.55% Jan. 2026 | $5,275,000 | 2% Aug. 2025 | 140 | $6,106,000
|
| $300 million 7.5% Aug. 2035 | $90,159,000 | 3% May 2045 | 120 | $128,754,000
|
| All to be exchanged for 2016 dollar new notes due April 15, 2016 with a 0.964% coupon.
|
| 7.5% notes due August 2035 are subordinated notes but will be exchanged for senior notes.
|
| Total includes a $50 per $1,000 early participation payment.
|
|
|
| Sterling market value exchange for 2016 sterling new notes
|
| Old notes | Tendered amount | Gilt | Spread (bps) | New issue
|
| £500 million 6.25% Dec. 2017 | £149,976,000 | 1% Sept. 2017 | 55 | £165,705,000
|
| £425 million 5.25% Dec. 2028 | £100,947,000 | 6% Dec. 2028 | 85 | £126,313,000
|
| £178 million 5.625% Sept. 2031 | £48,91,000 | 4.75% Dec. 2030 | 85 | £63,981,000
|
| £750 million 4.875% Sept. 2037 | £219,773,000 | 4.25% March 2036 | 135 | £251,625,000
|
| £450 million 5.375% Dec. 2040 | £99,738,000 | 4.25% Dec. 2040 | 90 | £130,701,000
|
| All to be exchanged for 2016 sterling new notes due April 15, 2016 with a 1.363% coupon.
|
| 4.875% notes due September 2037 are subordinated notes but will be exchanged for senior notes.
|
| Total includes a £50 per £1,000 early participation payment.
|
|
|
| 2020/2025/2035 market value exchange offers
|
| 2019-2021 market value exchange for 2020 new notes
|
| Old notes | Tendered | Purchase amount (74.43%) | Spread (bps) | New issue
|
| $2 billion 6% Aug. 2019 | $774,064,000 | $576,165,000 | 10 | $666,468,000
|
| $2 billion 2.2% Jan. 2020 | $989,186,000 | $736,289,000 | 10 | $750,842,000
|
| $2 billion 5.5% Jan. 2020 | $885,894,000 | $659,405,000 | 25 | $756,185,000
|
| $1.1 billion 5.55% May 2020 | $576,167,000 | $428,863,000 | 45 | $493,355,000
|
| $2.15 billion 4.375% Sept. 2020 | $956,351,000 | $711,848,000 | 50 | $786,671,000
|
| $2.25 billion 4.625% Jan. 2021 | $1,086.508,000 | $808,729,000 | 55 | $906,594,000
|
| $2 billion 5.3% Feb. 2021 | $885,375,000 | $659,018,000 | 75 | $755,162,000
|
| $3.15 billion 4.65% Oct. 2021 | $1,444,049,000 | $1,074,861,000 | 85 | $1,205,488,000
|
| All to be exchanged for 2020 dollar new notes due Nov. 15, 2020 with a 2.342% coupon.
|
| Total includes a $50 per $1,000 early participation payment.
|
| 5.3% notes due February 2021 are subordinated notes but will be exchanged for senior notes.
|
|
|
| 2022-2024 market value exchange for 2025 new notes
|
| Old notes | Tendered | Purchase amount (74.43%) | Spread (bps) | New issue
|
| $2 billion 3.15% Sept. 2022 | $916,965,000 | $682,532,000 | 35 | $704,632,000
|
| $2.5 billion 3.1% Jan. 2023 | $1,234,940,000 | $919,213,000 | 40 | $944,261,000
|
| $1 billion 3.45% May 2024 | $477,364,000 | $355,320,000 | 60 | $370,151,000
|
| All to be exchanged for 2025 dollar new notes due Nov. 15, 2025 with a 3.373% coupon.
|
| Total includes a $50 per $1,000 early participation payment.
|
|
|
| 2032-2039 market value exchange for 2035 new notes
|
| Old notes | Tendered | Purchase amount (74.43%) | Spread (bps) | New issue
|
| $5 billion 6.75% March 2032 | $2,842,823,000 | $2,116,021,000 | 75 | $2,864,310,000
|
| $2 billion 6.15% Aug. 2037 | $1,502,758,000 | $1,118,560,000 | 105 | $1,441,936,000
|
| $6.35 billion 5.875% Jan. 2038 | $4,773,773,000 | $3,553,301,000 | 105 | $4,451,966,000
|
| $4 billion 6.875% Jan. 2039 | $2,700,224,000 | $2,009,879,000 | 115 | $2,792,567,000
|
| All to be exchanged for 2035 dollar new notes due Nov. 15, 2035 with a 4.418% coupon.
|
| Total includes a $50 per $1,000 early participation payment.
|
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