Co-operative scraps tender for 5 5/8% notes amid ‘market volatility’

By Susanna Moon

Chicago, Nov. 21 – Co-operative Group Ltd. terminated the tender offer for its £450 million 5 5/8% notes due 2020 that ended at noon ET on Nov. 15 after failing to meet the new issue condition.

“Due to the market volatility driven by unforeseen events post the announcement of the offer and potential issue of new notes, the offeror has concluded that the potential new issue terms available at this time are not economically attractive. Accordingly, the offeror has decided not to proceed at this time with its previously announced issue of new notes,” according to a company notice.

As announced Nov. 9, the issuer was offering to purchase up to £250 million of the notes at a price of 107.25% plus accrued interest.

Co-operative planned to price new sterling-denominated fixed-rate notes with a roadshow that had been slated to begin Nov. 12.

The tender was contingent on pricing and subscription agreement for the new issue.

The company said on Nov. 16 that holders had tendered £266,972,000 of notes in the offer, but that it had decided to postpone pricing of the new issue until the following week and would decide then whether it would accept the notes tendered in the offer and how much.

Co-operative said it “will review its options once market conditions stabilize.”

A previously announced, the notes currently pay interest at the step-up amount of 6 7/8% and are guaranteed by Funeral Services Ltd., Co-operative Group Holdings (2011) Ltd., Co-operative Group Food Ltd., Co-operative Foodstores Ltd. and Rochpion Properties (4) LLP.

The tender was being held “to provide liquidity to noteholders and proactively manage the Co-op Group's balance sheet,” according to a previous announcement.

The dealer managers are Barclays Bank plc (+44 20 3134 8515 pr eu.lm@barclays.com), ING Bank NV, London Branch (+31 20 563 8017 or liability.management@ing.com) and Lloyds Bank Corporate Markets plc (+44 20 7158 1721 / 1726 or liability.management@lloydsbanking.com).

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

Co-operative Group is a Manchester, England-based consumer cooperative with a range of retail businesses.

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