TECO Energy determines payout to be made in exchange offer for 7.2%, 7% notes

By Angela McDaniels

Tacoma, Wash., Dec. 17 - TECO Energy, Inc. announced the total consideration noteholders will receive in connection with its offer to exchange its 7.2% notes due 2011 and 7% notes due 2012 for up to $300 million of new 6.572% notes due Nov. 1, 2017 issued by TECO Finance Inc.

For each $1,000 principal amount, the total consideration will be $1,066.79 for the 7.2% notes and $1,072.85 for the 7% notes.

The figures include an early participation payment of $20.00 for each note tendered by 5 p.m. ET on Dec. 5, the early participation date.

The total exchange prices were determined at 2 p.m. ET on Dec. 17 by reference to a fixed spread over the yield to maturity based on the bid-side price of the 3 7/8% U.S. Treasury note due Oct. 31, 2012. The fixed spread was 140 basis points for the 7.2% notes and 150 bps for the 7% notes. The treasury yield was 3.613%.

The 6.572% interest rate of the new notes was also determined on Dec. 17 and is equal to 2.375% plus the bid-side yield on the 4¼% U.S. Treasury note due Nov. 15, 2017, which was 4.197%.

Interest on the new notes will accrue from the settlement date, which is expected to be Dec. 21.

TECO Energy began the exchange offer on Nov. 20. It expires at 5 p.m. ET on Dec. 19.

The company will accept all tenders for the 7.2% notes before it accepts any tenders for the 7% notes.

To consummate the offer, TECO Energy said it must receive enough tenders to result in the issuance of at least $200 million of new notes.

As of 5 p.m. ET on Dec. 6, TECO Energy had received tenders to exchange $236.3 million of 7.2% notes and $155.1 million of 7% notes.

Noteholders who participate in the exchange offer whose notes are not accepted will automatically be included in a concurrent par-for-par exchange offer, under which noteholders will receive a like amount of new notes with identical terms issued by TECO Finance.

Global Bondholder Services Corp. (866 857-2200 or 212 430-3774) is the information agent.

TECO Energy is a Tampa, Fla.-based company engaged in diversified energy-related operations.

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