Published on 10/5/2015 in the Prospect News Investment Grade Daily and Prospect News Liability Management Daily.
GE Capital holders tender for exchange $53.9 billion of 123 note series
By Susanna Moon
Chicago, Oct. 5 General Electric Capital Corp. said 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 a company 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Tendered notes may no longer be withdrawn, as of 5 p.m. ET on Oct. 2.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 Capital said on Sept. 21 that newly formed finance subsidiary GE International Funding Co. had begun private offers to exchange new notes for outstanding debt securities.
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 be tendered in the par-for-par offers. In addition, most series could also be 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 is offering to exchange $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 is offering to swap out $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 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.
Pricing for the market value exchange offers will be calculated at 11 a.m. ET on Oct. 5.
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.
Exchange details
2016 market value exchange offers
USD (2019-2021) market value exchange for 2016 USD new notes
| Old notes | Tendered amount | New Issue | Spread over Treasury
|
| $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 USD new notes due April 15, 2016 with a coupon that will be set at the Eurodollar Synthetic Forward Rate from two business days after the Price Determination Date to the April 15, 2016 maturity date plus 60 bps.
|
| Reference Treasury is 1.375% due August 2020.
|
| 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.
|
|
|
| USD (2022-2024) market value exchange for 2016 USD new notes
|
| Old notes | Tendered amount | New Issue | Spread
|
| $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 USD new notes due April 15, 2016 with a coupon that will be set at the Eurodollar Synthetic Forward Rate from two business days after the Price Determination Date to the April 15, 2016 maturity date plus 60 bps.
|
| Reference Treasury is 2% due August 2025.
|
| Total includes a $50 per $1,000 early participation payment.
|
|
|
| USD Fixed-Rate (2016-2020) market value exchange for 2016 USD new notes
|
| Old notes | Tendered amount | New Issue | Treasury | Spread
|
| $1.25 billion 1.5% Jul 2016 | $422,462,000 | $426.67 million | 0.625% Aug 2017 | -70
|
| $250 million 1.45% Aug 2016 | $0 | $0 | 0.625% Aug 2017 | -70
|
| $100 million 4.575% Aug 2037 | $0 | $0 | 0.625% Aug 2017 | -75
|
| $1.25 billion 3.35% Oct 2016 | $515,411,000 | $531,992,000 | 0.625% Aug 2017 | -75
|
| $1.1 billion 5.375% Oct 2016 | $459,997,000 | $483,139,000 | 0.625% Aug 2017 | -55
|
| $1,425,000,000 | 2.9% Jan 2017 | $624,169,000 | $644.03 million | 0.625% Aug 2017 | -55
|
| $1.5 billion 5.4% Feb 2017 | $641,111,000 | $681.86 million | 0.625% Aug 2017 | -30
|
| $500 million 2.45% Mar 2017 | $328,546,000 | $337,157,000 | 0.625% Aug 2017 | -25
|
| $1 billion 1.25% May 2017 | $642,521,000 | $651,439,000 | 0.625% Aug 2017 | -50
|
| $2 billion 2.3% Apr 2017 | $844,784,000 | $868,176,000 | 0.625% Aug 2017 | -35
|
| $3 billion 5.625% Sep 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% Apr 2018 | $379,951,000 | $384,571,000 | 1% Sep 2018 | 0
|
| $4 billion 5.625% May 2018 | $1,393,870,000 | $1,543,697,000 | 1% Sep 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 | -5
|
| $700 million 3.8% Jun 2019 | $436,838,000 | $467,500,000 | 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 USD new notes due April 15, 2016 with a coupon that will be set at the Eurodollar Synthetic Forward Rate from two business days after the Price Determination Date to the April 15, 2016 maturity date plus 60 bps.
|
| For 3.8% notes due June 2019, the issuer is 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.
|
|
|
| Dollar floating-rate notes (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 USD new notes due April 15, 2016 with a coupon that will be set at the Eurodollar Synthetic Forward Rate from two business days after the Price Determination Date to the April 15, 2016 maturity date plus 60 bps.
|
| F-FRNs are fixed to floating-rate notes.
|
| Total includes a $50 per $1,000 early participation payment.
|
|
|
| Other Select dollar market value exchange for 2016 dollar new notes
|
| Old notes | Tendered amount | Treasury | Spread | New issue
|
| $300 million 1.25% Nov 2016 | $16.62 million | 0.625% Aug 2017 | -45 | $16.78 million
|
| $700 million 4.625% Jan 2043 | $61,193,000 | 1% Sep 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 USD new notes due April 15, 2016 with a coupon that will be set at the Eurodollar Synthetic Forward Rate from two business days after the Price Determination Date to the April 15, 2016 maturity date plus 60 bps.
|
| 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.
|
| GBP market value exchange for 2016 GBP new notes
|
|
|
| Old notes | Tendered amount | Gilt | Spread | New issue
|
| £500 million 6.25% Dec 2017 | £149,976,000 | 1% Sep 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% Mar 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 GBP new notes due April 15, 2016 with a coupon that will be set at the 2% Gilt due Jan. 22, 2016 plus 90 bps.
|
| 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
|
| USD (2019-2021) market value exchange for 2020 new notes
|
| Old notes | Tendered | Purchase amount (74.43%) | Spread | 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 USD new notes due Nov. 15, 2020 with a coupon that will be set at the yield of the 1.375% Treasury due Aug. 31, 2020 plus 105 bps.
|
| Reference Treasury is 1.375% due August 2020.
|
| 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.
|
|
|
| USD (2022-2024) market value exchange for 2025 new notes
|
| Old notes | Tendered | Purchase amount (74.43%) | Spread | 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 USD new notes due Nov. 15, 2025 with a coupon that will be set at the yield of the 2% Treasury due Aug. 15, 2025 plus 135 bps.
|
| Reference Treasury is 2% due August 2025.
|
| Total includes a $50 per $1,000 early participation payment.
|
|
|
| USD (2032-2039) market value exchange for 2035 new notes
|
| Old notes | Tendered | Purchase amount (74.43%) | Spread | New issue
|
| $5 billion 6.75% Mar 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 USD new notes due Nov. 15, 2035 with a coupon that will be set at the yield of the 3% Treasury due May 15, 2045 plus 155 bps.
|
| Reference Treasury is 3% due May 2045.
|
| Total includes a $50 per $1,000 early participation payment.
|
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