Tesco gives tally in oversubscribed tenders for 6.15% notes, seven other series via new issue

By Susanna Moon

Chicago, Oct. 29 – Tesco plc said investors had tendered $439,431,000 of its $850 million 6.15% senior notes due 2037 as of the early deadline at 5 p.m. ET on Oct. 26.

As announced Oct. 15, the company is tendering for up to $325 million of the notes until 11:59 p.m. ET on Nov. 9.

Because the offer cap has been reached, notes will be purchased using proration factor of 76.84445%, according to a company update on Monday.

The total purchase price will be $1,047.94 per $1,000 principal amount, with pricing set at 10 a.m. ET on Oct. 29 using the 3.125% Treasury note due May 2048 plus 215 basis points for a reference yield of 3.335%.

The total amount includes an early tender premium of $30 per $1,000 principal amount of notes tendered by the early deadline.

Holders also will receive accrued interest to but excluding the settlement date, which is expected to be Oct. 31 for early tenders and Nov. 14 for any remaining tenders.

“The offer and the concurrent non-U.S. tender offers are being made in the context of the offeror's strategic aim of strengthening the balance sheet,” according to a previous announcement.

The offer is not conditioned on any minimum amount of notes being tendered.

Tesco Corporate Treasury Securities plc plans to price a new series of euro-denominated fixed-rate notes to be guaranteed by the company, subject to market conditions.

The tender was conditioned on issue of the new notes before the early tender deadline with enough proceeds to fund the offer.

Tesco Corporate Treasury Services plc issued €750 million of 1 3/8% notes due 2023 guaranteed by Tesco on Oct. 24.

Tendered notes may not be withdrawn before the early deadline.

The dealer managers are BNP Paribas (888 210-4358, 212 841-3059, +44 20 7595 8668 or liability.management@bnpparibas.com), Citigroup Global Markets Ltd. (800 558-3745, 212 723-6106, +44 20 7986 8969 or liabilitymanagement.europe@citi.com), Goldman Sachs & Co. LLC (800 828-3182, 212 902-5183, +44 20 7774 9862 or liabilitymanagement.eu@gs.com) and MUFG Securities EMEA plc (877 744 4532, +44 20 7577 4048 / 4218 or DCM-LM@int.sc.mufg.jp).

The information & tender agent is Lucid Issuer Services Ltd. (tesco@lucid-is.com or +44 20 7704 0880).

Another set of offers

In a separate set of offers, the companies were tendering for seven series of notes until 11 a.m. ET on Oct. 26 with the purchase amount set based on the issue of new notes and the amount of notes purchased in the concurrent offer, as previously announced.

Tesco Corporate Treasury Services plc was holding a tender offer for its €931,229,000 of outstanding €1.25 billion 1.375% notes due July 2019 guaranteed by Tesco plc.

The company will accept for purchase €205,479,000 of the 1.375% notes using a scaling factor of 39.859%, according to a company update on Monday.

Pricing was set at 100.996 using a purchase yield of negative 0.15%, assuming a settlement date Nov. 5.

Meanwhile, Tesco plc was tendering for six more series of notes.

The company will accept the following amount of three of those series with pricing set at 9 a.m. ET on Oct. 29 using a benchmark security and a fixed spread, according to a separate announcement:

• £83,863,000 of the £180,767,000 outstanding £350 million 5½% notes due December 2019, with no scaling, for a purchase price of 104.762 using the 3.75% U.K. Treasury gilt due Sept. 7, 2019 plus 40 basis points for a benchmark rate of 0.73% and a purchase yield of 1.133%;

• £32,025,000of the £63,599,000 outstanding £300 million 4 7/8% notes due 2042, with 80.6132% scaling, for a purchase price of 114.279 using the 4.5% U.K. Treasury gilt due Dec. 7, 2042 plus 205 bps for a benchmark rate of 1.841% and a purchase yield of 3.929%; and

• £129.1 million of outstanding £500 million 5.2% notes due 2057 for a purchase price of 124.018 using the 4.25% U.K. Treasury gilt due Dec. 7, 2055 plus 215 bps for a benchmark rate of 1.824% and a purchase yield of 3.974%;

Holders also will receive accrued interest.

The company was also tendering for the following issues, but none of the notes will be purchased in the offer:

• £530,554,000 of outstanding £900 million 6 1/8% notes due 2022;

• £97,657,000 of outstanding £200 million 6% notes due 2029; and

• £149,855,000 of outstanding £200 million 5½% notes due 2033.

After settlement on Nov. 5, there will be left outstanding €725,750,000 of the July 2019 notes, £96,904,000 of the December 2019 notes, £530,554,000 of the 2022 notes, £97,657,000 of the 2029 notes, £149,855,000 of the 2033 notes, £31,574,000 of the 2042 notes and £72,750,000 of the 2057 notes.

The tender offers were “being made in the context of the offerors' strategic aim of strengthening the balance sheet,” according to a previous release.

The offers were also contingent on the issue of new notes.

The dealer managers are BNP Paribas (+44 20 7595 8668 or liability.management@bnpparibas.com), Citigroup Global Markets Ltd. (+44 20 7986 8969 or liabilitymanagement.europe@citi.com), Goldman Sachs International (+44 20 7774 9862 or liabilitymanagement.eu@gs.com) and MUFG Securities EMEA plc (+44 207 577 4048/+44 207 577 4218 or DCM-LM@int.sc.mufg.jp).

Lucid Issuer Services Ltd. (+44 20 7704 0880 or tesco@lucid-is.com) is the information and tender agent.

Tesco is a Cheshunt, England-based grocery and retail chain.

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