Altria lifts tender cap to $2.1 billion, reports early offer results

By Jennifer Chiou

New York, Nov. 12 - Altria Group, Inc. announced that it raised the tender cap in its cash offer for several series of senior notes to $2.1 billion from $2 billion principal amount. The company also announced pricing terms.

According to a press release, the company lifted the aggregate maximum purchase sublimit to $1.6 billion from $1.5 billion.

The company will now tender for up to $1.6 billion of its $1.5 billion outstanding 9.95% notes due 2038 and $1.5 billion outstanding 10.2% notes due 2039, with a priority acceptance level of 1.

The company also is tendering for its $1,949,308,000 outstanding 9.7% notes due 2018 and $1,350,692,000 9¼% notes due 2019. These notes have a priority acceptance level of 2.

As of 5 p.m. ET on Nov. 8, holders had tendered $1,205,712,000 of the 9.95% notes, $1,153,572,000 of the 10.2% notes, $849,174,000 of the 9.7% notes and $600,281,000 of the 9.25% notes.

The total aggregate principal amount of notes validly tendered by the early tender deadline was $3,808,739,000, which exceeds the tender cap.

Tendered notes with an acceptance priority level 1 will be accepted first, up to the purchase sublimit of $1.6 billion, before any priority level 2 notes are accepted.

For each $1,000 principal amount, Altria will pay a total consideration of $1,531.85 for the 9.95% notes, $1,566.68 for the 10.2% notes, $1,341.74 for the 9.7% notes and $1,340.19 for the 9.25% notes.

Pricing for the two series of notes with first priority was set at 11 a.m. ET on Nov. 12 using the bid-side price of the 2.875% Treasury note due May 15, 2043 plus a fixed spread of 198 basis points.

Pricing for the priority-two notes will be set using the bid-side price of the 1.375% Treasury note due Sept. 30, 2018 plus 95 bps for the 9.7% notes and 135 bps for the 9¼% notes.

The total purchase price for each series includes an early tender premium of $30.00 per $1,000 principal amount of notes tendered by the early deadline, 5 p.m. ET on Nov. 8.

Those who tender after the early deadline will receive the total payment less the early premium.

The tender offer will end at midnight ET on Nov. 25.

Tendered notes could be withdrawn until 5 p.m. ET on Nov. 8.

Holders also will be paid accrued interest up to but excluding the payment date.

The tender offer is conditioned on issuance of new notes by the end of the offer.

As previously reported, Altria launched a $3.2 billion two-part issue of senior notes.

Goldman Sachs & Co. (800 828-3182 or 212 902-6595 collect), RBS Securities Inc. (877 297-9832 or 203 897-6145) and Deutsche Bank Securities, Inc. are the lead dealer managers. Global Bondholder Services Corp. (banks and brokers can call 212 430-3774 collect; all others call 866 470-4200) is the information agent and depositary.

The issuer is a Richmond, Va.-based tobacco company. It launched the offer on Oct. 28.

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