Santander accepts tenders for £1.88 billion of notes in upsized offer

By Susanna Moon

Chicago, July 13 - Banco Santander SA subsidiary Santander UK plc will purchase all £1,881,983,807.57 of notes tendered in the offer that expired at 11 a.m. ET on July 12. The total purchase amount was upsized due to demand.

The breakdown for the eight series of notes tendered and accepted in the offer, along with the purchase price, is as follows:

• €150 million, priced at 82.5% of par, of the €150 million subordinated floating-rate notes due 2017 issued on Feb. 28, 2005 by Santander UK (formerly Alliance & Leicester plc). The Santander group holds €25 million of these notes;

• €99.5 million, priced at 81.5% of par, of the €100 million of callable step-up subordinated floating-rate notes due 2017 issued on Oct. 10, 2005 by Santander UK (formerly Alliance & Leicester);

• £120,656,000, priced at 88% of par, of the £150 million 6.5% subordinated notes due 2030 issued on Oct. 21, 1999 by Santander UK (formerly Abbey National plc);

• £77.19 million, priced at 107.5% of par, of the £150 million 10.125% subordinated guaranteed bonds due 2023 issued on Feb. 4, 1993 by Santander UK (formerly Abbey National Sterling Capital plc);

• £95.19 million, priced at 117.5% of par, of the £150 million 11.5% subordinated guaranteed bonds due 2017 issued on Dec. 30, 1991 by Santander UK (formerly Abbey National Sterling Capital);

• £227.67 million, priced at 104.5% of par, of the £350 million dated subordinated callable step-up notes due 2023 issued on April 30, 2008 by Santander UK (formerly Alliance & Leicester);

• £148,881,000, priced at 93% of par, of the £150 million 5.25% step-up subordinated callable notes due 2023 issued on March 6, 2003 by Santander UK (formerly Alliance & Leicester). The Santander group holds £92,508,000 of these notes; and

• £139,381,000, priced at 79% of par, of the £150 million 5.875% subordinated notes due 2031 issued on Aug. 14, 2001 by Santander UK (formerly Alliance & Leicester). The Santander group holds £88.02 million of these notes.

The company had planned to spend £1.5 billion minus an amount spent in another tender offer but decided to increase the total purchase funds after the offer was oversubscribed, according to a press release.

As previously noted, the total purchase funds is the pound sterling-equivalent of the total cash purchase price, excluding interest, payable by the company for the notes it accepts under its concurrent offer to purchase any and all of the $1 billion 8.963% noncumulative trust preferred securities issued by Abbey National Capital Trust I and the $1 billion 7.95% term subordinated securities due 2029 issued by Santander UK.

Holders will also receive accrued interest.

The tender offer will settle on July 16. The offer began on July 3.

The offer was not open to residents of the United States.

The company previously said the tender offer will allow it to enhance the quality of its capital structure through the generation of core tier 1 capital in the light of the regulatory changes expected to be introduced through the implementation of the Basel III accord.

The dealer managers are Barclays Bank plc (+44 207 773 8990 or eu.lm@barclays.com) and Merrill Lynch International (contact John Cavanagh at +44 20 7995 3715 or john.m.cavanagh@baml.com or contact Tommaso Gros-Pietro at +44 20 7995 2324 or tommaso.gros-pietro@baml.com).

The tender agent is Lucid Issuer Services Ltd. (contact Sunjeeve Patel/David Shilson at +44 207 704 0880 or santander@lucid-is.com).

Banco Santander is a bank based in Madrid.

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