Citi prices tender for 6.95%, 5.375% notes, gets $1.15 billion so far

By Angela McDaniels

Tacoma, Wash., Nov. 12 – Citigroup Inc. announced the early results of the tender offer for its $1.66 billion outstanding 5.375% notes due 2020 and subsidiary Associates First Capital Corp.’s $950 million of outstanding 6.95% notes due 2018 and determined the prices it will pay for the notes.

Holders had tendered $485,859,000 of the 6.95% notes and $666,966,000 of the 5.375% notes as of 5 p.m. ET on Nov. 10, the early tender date.

Citigroup said it accepted for purchase all of the early tendered notes. Settlement of those notes is expected to occur on Nov. 16.

As previously reported, Citigroup is offering to purchase for cash any and all of the 6.95% notes and up to $1 billion of the 5.375% notes.

The total consideration is $1,142.61 per $1,000 principal amount of 6.95% notes and $1,121.31 per $1,000 principal amount of 5.375% notes.

Pricing was determined at 2 p.m. ET on Nov. 12.

The total consideration for the 6.95% notes was calculated using a fixed spread of 75 basis points over the yield based on the bid-side price of the 0.875% Treasury due Oct. 15, 2018. The yield was 1.214%.

The total consideration for the 5.375% notes was calculated using a fixed spread of 90 bps over the yield based on the bid-side price of the 1.375% Treasury due Sept. 30, 2020. The yield was 1.73%.

The total consideration includes an early tender premium and will be paid only to holders who tendered by the early tender date.

Holders who tender their notes after the early tender date will receive only the tender offer consideration, which is the total consideration less the early tender premium.

Citigroup is soliciting consents from holders of the 6.95% notes to adopt amendments to the indenture governing those notes that would eliminate substantially all of the restrictive covenants contained in the indenture.

As of the early tender date, the issuers have not received the required consents to amend the 6.95% notes, according to a Wednesday press release. The issuers said they will continue to accept any consents delivered after the early tender date and at or before the expiration of the tender offer.

Holders may not tender their 6.95% notes without delivering consents or vice versa.

The offers will expire at 11:59 p.m. ET on Nov. 25. The payment date for notes tendered after the early deadline is expected to be Dec. 1.

If the total amount of 5.375% notes tendered in the offer exceeds the tender cap, then Citigroup will accept tendered 5.375% notes on a pro rata basis.

The New York-based banking and financial services company said it may increase the tender cap for the 5.375% notes at any time prior to the final settlement date.

Citigroup Global Markets Inc. (800 558-3745 or 212 723-6106) is the dealer manager and solicitation agent. Global Bondholder Services Corp. (866 807-2200 or 212 430-3774) is the depositary and information agent.

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