Realogy swaps new notes, convertibles for $2.74 billion of notes

By Angela McDaniels

Tacoma, Wash., Jan. 5 - Realogy Corp. received tenders for $2,742,000,000 of notes in the private exchange offers for its $1.7 billion of 10½% senior notes due 2014, $470 million of 11%/11¾% senior toggle notes due 2014 and $875 million of 12 3/8% senior subordinated notes due 2015, according to a company news release.

Specifically, holders tendered $1,636,000,000 principal amount, or 96%, of the 10½% notes, $421 million principal amount, or 90%, of the 12% notes and $685 million principal amount, or 78%, of the 13 3/8% notes.

All of the tendered notes were accepted for exchange.

The company issued $1,000 principal amount of new notes for each $1,000 principal amount of notes exchanged. This included a premium of $50 principal amount of new notes.

Originally, the premium was only being offered to holders who tendered by the consent time, 5 p.m. ET on Dec. 14. On Dec. 15, the company decided to pay the premium to all holders who tender.

The company also paid accrued interest up to but excluding the settlement date.

Holders were offered regular notes or 11% convertible senior subordinated notes due 2018 in exchange for the existing notes, provided that the company would issue no more than $2.3 billion of the convertibles. This cap was increased from $2.2 billion on Dec. 10.

The holders of the 10½% notes could choose to receive 11½% senior notes due 2017 or series A convertibles.

The company issued $130 million of the new 11½% notes and $1,144,000,000 of the series A convertibles.

The holders of the toggle notes could choose to receive 12% senior notes due 2017 or series B convertibles.

The company issued $130 million of the new 12% notes and $291 million of the series B convertibles.

The holders of the 12 3/8% notes could choose to receive 13 3/8% senior subordinated notes due 2018 or series C convertibles.

The company issued $10 million of the new 13 3/8% notes and $675 million of the series C convertibles.

In total, $2.11 billion of notes were tendered for convertibles and $632 million were tendered for regular notes.

Following the completion of the exchange offers, about $64 million of the 10½% notes, $49 million of the toggle notes and $190 million of the 12 3/8% notes remain outstanding.

The exchange offers began Dec. 1 and expired at midnight ET on Dec. 29.

The offers were conditioned on the tender of at least $2.65 billion of notes.

Consent solicitation

The company also solicited and received consents to some amendments to the note indentures that removed substantially all of the restrictive covenants and some default provisions. Consents were needed from the holders of at least a majority of the notes in order to amend the indentures.

Holders who tendered their notes had to deliver consents.

As of the consent time, the company had received enough consents to amend the 10½% notes and toggle notes but not enough to amend the 12 3/8% notes.

The exchange offers were not conditioned on the receipt of enough consents to make the proposed amendments.

New notes

When the offers began, the company said that its indirect parent Domus Holdings Corp. would reclassify all of its existing common stock into class A common stock and class B common stock. Class B shares would have five votes each, and class A shares would have one vote each.

The convertible notes will be convertible at any time into class A common stock. The conversion rate is 975.6098 for the series A and series B convertibles and 926.7841 for the series C convertibles.

The new notes are callable beginning April 15, 2013 at the following redemption prices:

• 105.75 in 2013, 102.875 in 2014 and par from 2015 onward for the 11½% notes;

• 106 in 2013, 103 in 2014 and par from 2015 onward for the 12% notes; and

• 106.688 in 2013, 104.458 in 2014 and par from 2015 onward for the 13 3/8% notes.

The exchange offers were made only to holders who are qualified institutional buyers or institutional accredited investors, each as defined under the Securities Act.

The information and exchange agent was Bondholder Communications Group, LLC (212 809-2663).

Realogy provides real estate and relocation services and is based in Parsippany, N.J.

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