Northrop Grumman fixes pricing in tender for six series of notes

By Jennifer Chiou

New York, Nov. 8 - Northrop Grumman Corp. announced the payouts in the tender offer for any and all of the $1.92 billion of debt securities issued by Northrop Grumman Systems Corp.

This first offer combines for a total $2.12 billion of offers - announced a week ago - also including securities from Northrop Grumman Shipbuilding, Inc.

The first tender offer will end at 5 p.m. ET on Nov. 8, and pricing is as follows for the notes issued by Northrop Grumman Systems for each $1,000 principal amount:

• $1,304.19 for the $300 million of 7.75% notes due 2016;

• $1,331.15 for the $300 million of 7.875% notes due 2026;

• $1,318.27 for the $300 million of 7.75% notes due 2026;

• $1,337.96 for the $168,818,000 of 7.75% notes due 2029;

• $1,356.19 for the $750 million of 7.75% notes due 2031; and

• $1,274.82 for the $100 million of 6.98% notes due 2036.

The payment for each $1,000 principal amount of notes was determined by reference to a fixed spread over the yield to maturity of a reference Treasury security calculated by the dealer managers at 2 p.m. ET on Nov. 8. Holders will also receive accrued interest.

The fixed spread is 60 basis points for the 7.75% notes due 2016, 65 bps for the 7.875% notes and the 7.75% notes due 2026, 80 bps for the 7.75% notes due in 2029 and 2031 and 90 bps for the 6.98% notes.

The reference Treasury is the 1.25% Treasury due Oct. 31, 2015 for the 7.75% notes due 2016 and the 4.375% Treasury due May 15, 2040 for the remaining notes.

As already stated, the second offer will end at 11:59 p.m. ET on Nov. 30 and is for Northrop Grumman Shipbuilding's $200 million of Gulf Opportunity Zone Industrial Development revenue bonds, which were issued through the Mississippi Business Finance Corp.

The company will pay par plus accrued interest for these notes.

The tender offers are not conditioned on any minimum amount of notes being tendered.

Debt offering

Northrop Grumman also previously announced that it began an underwritten public offering of senior debt securities.

The proceeds will be used for corporate purposes, including debt repayment, pension plan funding, acquisitions, share repurchases and working capital.

Debt repayment may include the repayment at maturity of $750 million of principal amount outstanding of Northrop Grumman Systems' 7.125% notes due Feb. 15, 2011 and for funding the purchase price of the notes tendered and accepted in the first tender offer.

The lead dealer managers for the first tender offer are Deutsche Bank Securities Inc. (866 627-0391 or 212 250-2955), Goldman Sachs & Co. (800 828-3182 or 212 902-5128) and J.P. Morgan Securities LLC (866 834-4666 or 212 834-2494). BNP Paribas Securities Corp., Citigroup Global Markets Inc., RBS Securities Inc. and Wells Fargo Securities, LLC are the co-dealer managers.

For the second tender offer, JPMorgan (866 834-4666 or 212 834-3261) is the lead dealer manager, and Morgan Stanley & Co. Inc. and SunTrust Robinson Humphrey are the co-dealer managers.

The information agent for both tender offers is Global Bondholder Services Corp. (866 804-2200 or 212 430-3774).

Northrop Grumman is a Los Angeles-based security company that provides products and services in the aerospace, electronics, information and services and shipbuilding sectors.

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