By Toni Weeks
San Luis Obispo, Calif., Aug. 5 - Union Pacific Corp. said about $1.27 billion of notes were tendered for exchange as of 5 p.m. ET on Aug. 2, the early exchange deadline for the company's private offers for 12 series of notes, according to a company news release. The company also released pricing for the exchange offers.
The amounts tendered for exchange as of the early deadline are listed in order of acceptance priority for the following six series of notes, which the company is exchanging for notes due 2024:
• $237,253,000 of $400 million of 6.125% notes due 2020;
• $20.01 million of $178,541,000 of 7.875% notes due 2019;
• $8.23 million of $211.75 million of 7% debentures due 2016;
• $38.17 million of $232,058,000 of 5.65% notes due 2017;
• $69,215,000 of its $321,585,000 of 5.75% notes due 2017; and
• $103.38 million of $472,705,000 of 5.7% notes due 2018.
Likewise, the amounts tendered for exchange so far are listed in order of acceptance priority for the following six series of notes, which the company is exchanging for notes due 2044:
• $286,355,000 of $375.9 million of 5.78% notes due 2040;
• $137,586,000 of $250 million of 6.15% debentures due 2037;
• $72.94 million of $250 million of 7.125% debentures due 2028;
• $176.86 million of $600 million of 6.625% debentures due 2029;
• $86.04 million of $250 million of 6.25% debentures due 2034; and
• $32,081,000 of $200 million of 5.375% debentures due 2033.
Union Pacific also announced it has increased the amount of 2044 notes that it will issue to $700 million from $500 million. It will issue no more than $500 million of new 2024 notes, as noted before.
The company determined pricing at 11 a.m. ET on Aug. 5. The total exchange prices include a principal amount to be paid in new notes and a cash amount and were calculated based on the yields for the exchange offers, as noted in the table below. Holders who tendered by the early deadline will receive an early exchange cash premium of $50 per $1,000 of existing notes, which is included in the total exchange prices.
The company previously said there will be enough new 2024 notes for it to accept any and all of the 6.125% notes due 2020 tendered, and there will be enough new 2044 notes for it to accept any and all of the 5.78% notes due 2040 tendered. The remaining amounts of each other series of notes that are exchanged will be determined in accordance with the caps and their acceptance priority levels.
The exchange offers will expire at 11:59 p.m. ET on Aug. 16.
According to the press release, the annual interest rate on the new notes due 2024 will be 3.646%, which was determined as the bid-side yield of a designated reference security on the pricing date, which was 2.626%, plus the applicable spread. The interest rate on the new 2044 notes will be 4.821%, which was determined as the bid-side yield of the designated reference security as of the pricing date, which was 3.721%, plus the spread.
The 2024 offers are subject to the condition that holders tender enough notes to require the issuance of at least $250 million principal amount of new 2024 notes. Similarly, the 2044 offers are subject to the condition that holders tender enough notes to require the issuance of at least $250 million principal amount of new 2044 notes. Both of these conditions have been met.
The 2024 offers are not conditioned on the company's ability to complete the 2044 offers and vice versa.
The exchange offers are only being made to noteholders who are qualified institutional buyers as defined in Rule 144A under the Securities Act or who are not U.S. persons as defined under Regulation S.
The information agent is D.F. King & Co., Inc. (212 269-5550, 800 714-3312, unp@dfking.com or http://www.dfking.com/unp).
Union Pacific is a railroad company based in Omaha.
Union Pacific exchange offers
Total exchange price, per $1,000 principal
including $50 early exchange premium
| Notes series | Reference yield | Fixed spread, bps New notes | Cash payment
|
|
|
| 2024 offers
|
| 6.125% notes due 2020 | 2.646% | 0 | $925 | $281.02
|
| 7.875% notes due 2019 | 1.378% | 85 | $925 | $360.78
|
| 7% debentures due 2016 | 0.595% | 20 | $700 | $449.91
|
| 5.65% notes due 2017 | 1.378% | 10 | $925 | $224.44
|
| 5.75% notes due 2017 | 1.378% | 30 | $925 | $240.70
|
| 5.7% notes due 2018 | 1.378% | 60 | $925 | $250.80
|
|
|
| 2044 offers
|
| 5.78% notes due 2040 | 3.721% | 90 | $1,025 | $152.37
|
| 6.15% debentures due 2037 | 3.721% | 85 | $1,000 | $226.97
|
| 7.125% debentures due 2028 | 3.721% | 40 | $1,000 | $324.52
|
| 6.625% debentures due 2029 | 3.721% | 50 | $1,000 | $270.72
|
| 6.25% debentures due 2034 | 3.721% | 75 | $1,000 | $238.46
|
| 5.375% debentures due 2033 | 3.721% | 70 | $1,000 | $124.84
|
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