Farmers Insurance amends pricing date in tender offers for three series

New York, Oct. 24 - Farmers Insurance Exchange, Fire Insurance Exchange and Truck Insurance Exchange said they have pushed back the pricing date in their concurrent tender offers for three series of notes.

According to a company news release, pricing will now be fixed at 2 p.m. ET on Oct. 29, instead of Oct. 24.

No other changes were made to the offers.

As reported, the early deadline is now 5 p.m. ET on Oct. 28, previously pushed back from 5 p.m. ET on Oct. 23.

At the previous announcement on Oct. 21, the companies modified the pricing terms for Farmers Exchange Capital's outstanding 7.05% trust surplus note securities.

As announced earlier, Farmers Insurance Exchange began a tender offer for its outstanding 8.625% surplus notes due 2024, and the three exchanges began a tender offer for up to $550 million liquidation amount, less any amount accepted in the 8.625% notes tender offer, of the 7.05% notes and Farmers Exchange Capital's 7.2% trust surplus note securities.

All tendered 8.625% notes will be accepted for purchase, and all tendered 7.05% trust notes will be accepted for purchase before any 7.2% trust notes are accepted.

The total consideration for each series of notes will be determined by reference to the fixed spread over the yield to maturity of a reference Treasury security at 2 p.m. ET on Oct. 29.

The reference Treasury is the 2.5% Treasury note due Aug. 15, 2023 for the 8.625% notes and the 7.05% trust notes and the 2.875% Treasury note due May 15, 2043 for the 7.2% trust notes. The fixed spread is 185 basis points for the 8.625% notes, 215 bps for the 7.05% trust notes and 240 bps for the 7.2% trust notes. The spread for the 7.05% trust notes was originally 225 bps.

There are currently $300 million principal amount of outstanding 8.625% notes, $500 million liquidation amount of 7.05% trust notes and $150 million liquidation amount of 7.2% trust notes.

The tender offers will expire at midnight ET on Nov. 6.

Holders must tender their notes before the early deadline to receive the total consideration, which will include an early tender payment of $50.00 per $1,000 principal or liquidation amount of notes.

The exchanges will also pay accrued interest or accumulated distributions, as applicable, up to but excluding the settlement date.

The tender offers are conditioned on the issuance of at least $350 million of surplus notes. The proceeds of the notes and cash on hand will be used to fund the tender offers.

The dealer managers are Citigroup Global Markets Inc. (800 558-3745 or 212 723-6106) and RBS Securities Inc. (203 897-6145 or 877 297-9832). The information agent and depositary is Global Bondholder Services Corp. (212 430-3774 for banks and brokers or 866 807-2200).

The exchanges, their subsidiaries and their affiliates make up the Farmers Insurance Group of Companies, an insurance group based in Los Angeles.

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