ITC begins tender offer, solicits consents for 5.875%, 6.375% notes

By Marisa Wong

Madison, Wis., May 2 - ITC Holdings Corp. announced it has begun a cash tender offer for any and all of its outstanding $255 million of 5.875% senior notes due 2016 and its $255 million of 6.375% senior notes due 2036.

ITC is also soliciting consents to proposed amendments that modify some of the covenants contained in the indenture governing the notes.

Holders may either tender their notes and deliver their consents to the proposed amendments at the same time or separately deliver their consents on or before the early tender and consent expiration date without tendering their notes. If holders elect to tender their notes by the early tender and consent expiration date, the tender constitutes delivery of consents to the proposed amendments.

The consent solicitation is scheduled to expire at 5 p.m. ET on May 15.

The cash tender offer is scheduled to expire at 11:59 p.m. ET on May 30. The settlement date will follow promptly the offer expiration date and is expected to be June 2.

Tendered notes may not be withdrawn and consents may not be revoked after the early tender and consent expiration date.

The total consideration for each $1,000 principal amount of notes accepted for purchase under the tender offer will be calculated at 2 p.m. ET on May 15 using a fixed spread over an applicable reference yield, based on the bid-side price of an applicable reference security.

The fixed spread is 25 basis points for the 5.875% notes and 130 bps for the 6.375% notes. The reference security is the 1% Treasury note due Sept. 30, 2016 for the 5.875% notes and the 3.75% Treasury note due Nov. 15, 2043 for the 6.375% notes.

Holders must tender their notes by the early tender date in order to be eligible to receive an early tender premium of $30.00 per $1,000 of notes. Holders tendering notes after the early date will be eligible to receive only the tender offer consideration, namely the total consideration less the early tender premium.

The company will also pay accrued interest from the last interest payment date to, but not including, the payment date.

Holders who deliver consents on or before the consent expiration date without tendering their notes will be eligible to receive a consent payment of $2.50 per $1,000 of notes. The consent payment will not be payable to holders delivering consents by tendering notes.

ITC needs consents from holders of a majority in principal amount of the notes to authorize the proposed changes.

The tender offer and consent solicitation are subject to a financing condition.

J.P. Morgan Securities LLC (866 834-4666 or 212 834-4811) and BofA Merrill Lynch (888 292-0070 or 980 387-3907) are the dealer managers for the tender offer and solicitation agents for the consent solicitation. D.F. King & Co., Inc. (212 269-5550 for banks and brokers or 888 869-7406) is the information agent and tender agent.

ITC Holdings is an electric transmission company based in Novi, Mich.

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