Caterpillar gets early tenders for $380.85 million notes, sets pricing

By Marisa Wong

Morgantown, W.Va., Sept. 21 – Caterpillar Financial Services Corp. announced it received tenders for a total of $380.85 million principal amount of notes as of 5 p.m. ET on Sept. 20, the early participation date of its previously announced exchange offer for three series of notes.

The company said it will accept all of the tendered notes for exchange. Settlement of the early tenders is expected to occur on Sept. 26.

As announced on Sept. 7, the company is offering new medium-term notes, series H, due 2021 and cash for the following three series of its existing notes:

• $400 million of 5.85% medium-term notes, series F, due 2017, $38,306,000 of which was tendered as of the early participation date;

• $750 million of 5.45% medium-term notes, series F, due 2018, $205,396,000 of which was tendered as of the early participation date; and

• $550 million of 7.05% medium-term notes, series F, due 2018, $137,148,000 of which was tendered as of the early participation date.

Pricing was set at 11 a.m. ET on Sept. 21. The total exchange price is as follows:

• $1,047.24 for each $1,000 principal amount of 5.85% notes. The new notes component is $800, and the cash component is $217.24. Pricing was set using a fixed spread of 5 basis points and the 0.625% Treasury due Aug. 31, 2017;

• $1,070.69 for each $1,000 of 5.45% notes. The new notes component is $1,000, and the cash component is $40.69. Pricing was set using a fixed spread of 5 bps and the 0.75% Treasury due Aug. 31, 2018; and

• $1,120.17 for each $1,000 of 7.05% notes. The new notes component is $950, and the cash component is $140.17. Pricing was set using a fixed spread of 20 bps and the 0.75% Treasury due Aug. 31, 2018.

The total exchange price also includes an early participation premium of $30.00 in cash for each $1,000 principal amount of notes tendered by the early participation date.

The company will also pay accrued interest to but excluding the applicable settlement date.

The offer ends at 11:59 p.m. ET on Oct. 4. Final settlement is slated for Oct. 6.

The new notes will mature on Oct. 1, 2021 and will bear interest at 1.931%. The coupon was set at the bid-side yield of the 1.125% Treasury due Aug. 31, 2021 plus 70 bps.

Caterpillar Financial is conducting the offer under Rule 144A and Regulation S.

Conditions to the exchange include that sufficient existing notes are tendered to allow for the issuance of $250 million of new notes, that the pricing for the offer does not result in the new and existing notes being treated as “substantially different” under accounting standards and that all the new notes will be treated as part of the same issue for federal income tax purposes.

D.F. King & Co., Inc. (888 540-8597, 212 269-5550 or cat@dfking.com) is the information agent.

The issuer had said it is aiming to reduce the weighted average cost of its debt by refinancing the existing notes at a lower coupon and to extend the maturity of its borrowings. It noted “favorable market conditions.”

Caterpillar Financial is a Nashville-based subsidiary of Caterpillar Inc. that provides financing for customers and dealers of Caterpillar’s equipment, machinery and engines.

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