British American Tobacco ups tender cap, gives early results, pricing

By Wendy Van Sickle

Columbus, Ohio, Oct. 6 – British American Tobacco plc announced the early results and pricing details of wholly owned subsidiaries B.A.T Capital Corp., B.A.T. International Finance plc and Reynolds American Inc.’s cash tender offers to purchase securities from seven series up to a maximum aggregate purchase price.

In addition, British American Tobacco announced it increased the maximum aggregate purchase price (excluding accrued interest) from $2 billion to an amount sufficient to purchase all of the early tendered notes, subject to the tender sub-caps on two series. After setting pricing, the company determined that the new maximum aggregate purchase is about $3.564 billion (excluding accrued interest).

By the early deadline, 5 p.m. ET on Oct. 5, the issuers had received the following early tenders, with the notes listed in order of acceptance priority level and with the total considerations listed per $1,000 principal amount:

• $267,599,000 of the $500 million outstanding 3.5% guaranteed notes due 2022 (Cusip: 05530QAL4, G08820CJ2) issued by B.A.T. International, for $1,052.98 based on the 0.125% U.S. Treasury due Aug. 31, 2022 and a fixed spread of 20 basis points;

• $90,205,000 of the $158,484,000 outstanding 3.25% senior notes due 2022 (Cusip: 761713AX4) issued by Reynolds American, for $1,058.60 based on the 0.125% U.S. Treasury due Aug. 31, 2022 and a fixed spread of 25 bps;

• $1,649,091,000 of the $2.25 billion outstanding 2.764% notes due 2022 (Cusip: 05526DAV7) issued by B.A.T. Capital, for $1,040.81 based on the 0.125% U.S. Treasury due Aug. 31, 2022 and a fixed spread of 30 bps;

• $481,425,000 of the $900 million outstanding 3.25% guaranteed notes due 2022 (Cusip: 05530QAF7, G08820BX2) issued by B.A.T. International, for $1,046.38 based on the 0.125% U.S. Treasury due Aug. 31, 2022 and a fixed spread of 30 bps;

• $703,078,000 of the $1 billion outstanding 4% senior notes due 2022 (Cusip: 761713BF2) issued by Reynolds American, for $1,059.28 based on the 1.75% U.S. Treasury due June 15, 2022 and a fixed spread of 30 bps;

• £250 million outstanding 6% guaranteed notes due 2022 (ISIN: XS0436059843) issued by B.A.T. International, for £1,093.71 based on the 4% U.K. Treasury due March 7, 2022 and a fixed spread of 55 bps; and

• €600 million outstanding 3.625% guaranteed notes due 2021 (ISIN: XS0704178556) issued by B.A.T. International at a fixed purchase price of €1,041.68 per €1,000 principal amount.

The 6% notes due 2022 and 3.625% notes due 2021 series are each subject to a tender sub-cap of $100 million and €100 million, respectively.

The companies plan to accept all of the early tendered notes with acceptance priority levels 1 through 5, the early tendered notes with acceptance priority level 6 using a proration factor of 70% and the early tendered notes with acceptance priority level 6 using a proration factor of 41.87%.

The total consideration includes an early tender premium of $30, £30 or €30 per $1,000, £1,000 or €1,000 principal amount, as applicable, of notes tendered by the early tender deadline.

In addition to the total consideration, holders will receive accrued interest to but excluding the settlement date.

The offer will expire at 11:59 p.m. ET on Oct. 20. However, because the aggregate purchase price for all notes tendered by the early deadline exceeds the offer cap, the offerors will not accept for purchase any securities tendered after the early deadline.

Early settlement will be on Oct. 8. Final settlement was slated for Oct. 22.

The tender offer is subject to a financing condition.

Tenders may no longer be withdrawn.

BofA Securities (+44 20 7996 5420, 888 292 0070, DG.LM-EMEA@bofa.com), Deutsche Bank Securities (+44 20 7545 8011, 866 627-0391) and Goldman Sachs & Co. LLC (+44 20 7552 6157 or 800 828-3182) are dealer managers for the tender offer.

Global Bondholder Services Corp. (http://www.gbsc-usa.com/registration/bat/, 212 430-3774 for banks and brokers or 866 470-3900 for all others, contact@gbsc-usa.com) is the information and tender agent.

The cigarette manufacturing company is based in London.

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