Sara Lee nixes caps for 6.125%, 4.1% notes, will accept no 2.75% notes

By Angela McDaniels

Tacoma, Wash., March 20 - Sara Lee Corp. eliminated the series-specific tender caps for its $500 million of 6.125% notes due 2032 and $400 million of 4.1% notes due 2020 and determined that it will not purchase any of its $400 million of 2.75% notes due 2015, according to company news releases.

The company will purchase no more than $470 million principal amount of notes. This overall cap remains unchanged.

A tender offer for the notes began March 6 and will end at midnight ET on April 2.

Originally, the company had a $250 million cap on the 6.125% notes, a $150 million cap on the 4.1% notes and a $150 million cap on the 2.75% notes.

The notes are listed in order of acceptance priority level.

Holders had tendered $888,607,000 principal amount of notes as of the early tender date, 5 p.m. ET on March 19. That included $347,784,000 principal amount, or 69.56%, of the 6.125% notes, $259,854,000 principal amount, or 64.96%, of the 4.1% notes and $280,969,000 principal amount, or 70.24%, of the 2.75% notes.

None of the 2.75% notes will be accepted for purchase because the offer is already oversubscribed.

For each $1,000 principal amount, the company will pay $1,044.97 for the 6.125% notes and $1,017.36 for the 4.1% notes. These prices include an early tender premium of $30.00 for each note tendered by the early tender date.

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

Pricing was set on March 20 using the 3.125% Treasury due Nov. 15, 2041 plus a spread of 230 basis points for the 6.125% notes and the 2% Treasury due Feb. 15, 2022 plus 150 bps for the 4.1% notes. The reference yield is 3.449% for the 6.125% notes and 2.357% for the 4.1% notes.

Goldman Sachs & Co. (800 828-3182 or 212 357-4692) and Morgan Stanley & Co. LLC (800 624-1808 or 212 761-1057) are the lead dealer managers. BNP Paribas Securities Corp., Lloyds Securities Inc., Mitsubishi UFJ Securities (USA), Inc. and RBS Securities Inc. are the co-dealer managers.

D.F. King & Co., Inc. (800 290-6427) is the tender agent and the information agent.

Sara Lee manufactures and markets brand-name consumer products focused primarily on meats, bakery, beverage and household products. It is based in Downers Grove, Ill.

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