AA Bond caps tender for 4.2487% notes due 2020/2043 at £300 million

By Susanna Moon

Chicago, July 11 – AA Bond Co. Ltd. said investors had tendered £458,407,000 of its £500 million of 4.2487% class A3 secured notes due 2020/2043 in the offer that ended at 10 a.m. ET on July 9.

The issuer expects to accept £300 million principal amount of the notes on Wednesday using a scaling factor of 66.31135%, according to a company announcement.

The purchase price will be 105.087% of par, based on a benchmark reference yield of 0.749% and a purchase yield of 1.699%.

Pricing for the tender offer was set at 6 a.m. ET on July 10 using the 2% U.K. Treasury gilt due July 22, 2020 plus 95 basis points.

Noteholders also will receive accrued interest to but excluding the settlement date.

As announced July 2, the offer was contingent on pricing of new sterling-denominated sub-class A7 fixed-rate notes due 2024 and the issuer expected to purchase between £250 million and £350 million of the notes in the tender offer.

The issuer said it priced new £550 million 4.875% sterling-denominated sub-class A7 fixed-rate notes due 2024/2043.

After the repurchase, there will be £200 million of the notes left outstanding.

“The offer is being made as part of the borrower’s liability management program to optimize debt maturities and cost of debt, in the context of current market conditions and upcoming maturities in respect of certain of the borrower’s financing arrangements,” the previous release said.

Proceeds of the new notes also will be used to prepay the company’s £250 million senior term facility due 2021.

The lead dealer managers are Barclays (+44 20 3134 8515 or eu.lm@barclays.com), Credit Suisse Securities (Europe) Ltd. (+44 20 7883 8763 or liability.management@credit-suisse.com) and Lloyds Bank Corporate Markets plc (+44 20 7158 1721 or liability.management@lloydsbanking.com).

The dealer managers are BNP Paribas and Citigroup Global Markets Ltd.

The tender agent is Lucid Issuer Services Ltd. (+44 20 7704 0880 or theaa@lucid-is.com).

The issuer, based in Basingstoke, England, is the United Kingdom's largest provider of roadside assistance service.

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