By Susanna Moon
Chicago, March 21 - Hartford Financial Services Group, Inc. said it tallied the early tenders in the offer for $800 million principal amount of senior debt as part of the debt reduction component of its capital management plan.
The tender offers consist of three parts, as listed in the tables below: a first-tranche Dutch auction offer to purchase up to $300 million of notes, a second-tranche Dutch auction offer for up to $150 million of notes and a waterfall offer for up to $350 million of notes.
The company also announced pricing for the offers.
The breakdown for the tendered notes and the accepted amount is as follows:
• $40,656,000, or 20.33%, of the $200 million 7.3% debentures due 2015, with $33,125,000 accepted for purchase;
• $213.62 million, or 42.72%, of the $500 million 6.3% senior notes due 2018, with $179,865,000 accepted;
• $134,384,000, or 26.88%, of the $500 million 6% senior notes due 2019, with $87.01 million accepted;
• $79,736,000, or 26.58%, of the $300 million 5.5% senior notes due 2016, with $25,076,000 accepted;
• $165,944,000, or 33.19%, of the $500 million 5.375% senior notes due 2017, with $84,329,000 accepted;
• $189,798,000, or 58.40%, of the $325 million 4% senior notes due 2017, with $29.4 million accepted;
• $139,114,000, or 46.37%, of the $300 million 4% senior notes due 2015, with $11,195,000 accepted;
• $69.2 million, or 46.47%, of the $148.9 million 7.65% debentures due 2027, with $69.2 million accepted;
• $29,022,000, or 31.41%, of the $92.4 million 7.375% senior notes due 2031, with $29,022,000 accepted;
• $247,119,000, or 58.15%, of the $425 million 6.625% senior notes due 2042, with $247,119,000 accepted;
• $162.17 million, or 54.06%, of the $300 million 6.625% senior notes due 2040, with $4,659,000 accepted;
• $54,972,000, or 18.32%, of the $300 million 5.95% senior notes due 2036, with none accepted; and
• $144,658,000, or 35.39%, of the $408.8 million 6.1% senior notes due 2041, with none accepted.
Pricing
Pricing was set at 2 p.m. ET on March 21 using a clearing premium of 40 basis points for the first tranche Dutch auction offer, of 25 bps for the second tranche Dutch auction offer and a fixed spread above the bid-side yield of a reference security for the waterfall offer, as set out below.
The total purchase price, reference yield and purchase yield are as follows:
• $1,169.56 for the 7.3% debentures due 2015, with a clearing spread of 45 bps, reference yield of 0.25% and purchase yield of 0.7%;
• $1,226.61 for the 6.3% senior notes due 2018, with a clearing spread of 75 bps, reference yield of 0.795% and purchase yield of 1.545%;
• $1,212.29 for the 6% senior notes due 2019, with a clearing spread of 130 bps, reference yield of 0.795% and purchase yield of 2.095%;
• $1,148.47 for the 5.5% senior notes due 2016, with a clearing spread of 85 bps, reference yield of 0.367% and purchase yield of 1.217%;
• $1,155.26 for the 5.375% senior notes due 2017, with a clearing spread of 55 bps, reference yield of 0.795% and purchase yield of 1.345%;
• $1,107.52 for the 4% senior notes due 2017, with a clearing spread of 75 bps, reference yield of 0.795% and purchase yield of 1.545%;
• $1,061.65 for the 4% senior notes due 2015, with a clearing spread of 65 bps, reference yield of 0.25% and purchase yield of 0.9%;
• $1,369.07 for the 7.65% debentures due 2027, with a reference yield of 1.93% and purchase yield of 4.18%;
• $1,363.08 for the 7.375% senior notes due 2031, with a reference yield of 3.171% and purchase yield of 4.421%;
• $1,328.44 for the 6.625% senior notes due 2042, with a reference yield of 3.171% and purchase yield of 4.571%;
• $1,316.79 for the 6.625% senior notes due 2040, with a reference yield of 3.171% and purchase yield of 4.571%;
• $1,197.60 for the 5.95% senior notes due 2036, with a reference yield of 3.171% and purchase yield of 4.571%; and
• $1,242.29 for the 6.1% senior notes due 2041, with a reference yield of 3.171% and purchase yield of 4.571%.
The total purchase price includes an early tender payment of $30 per $1,000 of notes tendered by 5 p.m. ET on March 20, the early tender date. Holders who tender their notes after the early tender date will receive the total purchase price less the early tender payment.
The company also plans to pay accrued interest to but excluding the settlement date of March 26 for early tendered notes and April 4 for notes tendered after the early deadline.
The tender offers will end at 11:59 p.m. ET on April 3.
The company previously said it could purchase notes on a prorated basis if an offer was oversubscribed.
As part of its overall capital management plan, the company plans to issue new long-term senior debt securities in an amount equal to all or a portion of the amount purchased in the waterfall tender offer, according to a previous company press release.
As part of this plan, the company expects to reduce its debt outstanding by about $1 billion. This includes the company's plans to repay 2013 and 2014 debt maturities totaling $520 million.
BofA Merrill Lynch (888 292-0070 or collect 980 683-3215), Credit Suisse Securities (USA) LLC (800 820-1653 or collect 212 538-2147) and J.P. Morgan Securities LLC (866 834-4666 or collect 212 834-4811) are the dealer managers. D.F. King & Co., Inc. (800 488-8095 or 212 269-5550) is the tender agent and information agent.
The investment and insurance company is based in Hartford, Conn.
Hartford Dutch auction tender offers
| Notes | Minimum spread | Base spread | Reference security
|
| First tranche
|
| 7.3% notes due 2015 | 45 bps | 85 bps | 0.25% Treasury due Feb. 28, 2015
|
| 6.3% notes due 2018 | 75 bps | 115 bps | 0.75% Treasury due Feb. 28, 2018
|
| 6% notes due 2019 | 130 bps | 170 bps | 0.75% Treasury due Feb. 28, 2018
|
|
|
| Second tranche
|
| 5.5% notes due 2016 | 70 bps | 110 bps | 0.375% Treasury due Feb. 15, 2016
|
| 5.375% notes due 2017 | 40 bps | 80 bps | 0.75% Treasury due Feb. 28, 2018
|
| 4% notes due 2017 | 60 bps | 100 bps | 0.75% Treasury due Feb. 28, 2018
|
| 4% notes due 2015 | 50 bps | 90 bps | 0.25% Treasury due Feb. 28, 2015
|
|
|
| Hartford waterfall tender offer
|
| Notes, | Fixed spread | Reference security
|
| Listed in order of priority acceptance
|
| 7.65% notes due 2027 | 225 bps | 2% Treasury due Feb. 15, 2023
|
| 7.375% notes due 2031 | 125 bps | 2.75% Treasury due Nov. 15, 2042
|
| 6.625% notes due 2042 | 140 bps | 2.75% Treasury due Nov. 15, 2042
|
| 6.625% notes due 2040 | 140 bps | 2.75% Treasury due Nov. 15, 2042
|
| 5.95% notes due 2036 | 140 bps | 2.75% Treasury due Nov. 15, 2042
|
| 6.1% notes due 2041 | 140 bps | 2.75% Treasury due Nov. 15, 2042
|
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