Canadian Pacific Railway begins tender offer for four series of notes

By Angela McDaniels

Tacoma, Wash., June 5 – Canadian Pacific Railway Ltd. subsidiary Canadian Pacific Railway Co. began a tender offer for its $350 million outstanding 7.125% notes due 2031, $250 million outstanding 9.45% notes due 2021, $450 million outstanding 5.95% notes due 2037 and $250 million outstanding 5.75% notes due 2033, according to a company news release.

The offer is subject to a $400 million cap on the aggregate purchase price paid for the notes.

The notes are listed in order of acceptance priority level. If the aggregate purchase price of notes of any series tendered exceeds the amount of the tender cap available for application to the acceptance priority level for that series of notes, then – if notes of that series are accepted for purchase – those notes will be accepted on a pro rata basis.

The total considerations will be determined by reference to a fixed spread over the yield to maturity of a reference U.S. Treasury security, which is the 2.5% Treasury due May 15, 2024 for the 9.45% notes and the 3.625% Treasury due Feb. 15, 2044 for the remaining notes. The spread is 75 basis points for the 7.125% notes, 65 bps for the 9.45% notes and 80 bps for the 5.95% notes and 5.75% notes.

The total considerations will include an early tender payment of $30 per $1,000 principal amount of notes tendered by the early tender date, 5 p.m. ET on June 18.

Holders will also receive accrued interest up to but excluding the settlement date, which is expected to be June 24 for notes tendered by the early tender date and July 3 for notes tendered after that time but prior to the offer expiration.

The offers will expire at midnight ET at the end of the day on July 2.

The tender offers are subject to the completion of one or more debt financing transactions.

The dealer managers are Morgan Stanley & Co. LLC (800 624-1808 or 212 761-1057), BofA Merrill Lynch (888 292-0070 or 980 387-3907) and HSBC Securities (USA) Inc. (888 HSBC-4LM or 212 525-5522). The information agent is D.F. King & Co. (212 269-5550 for banks and brokers or 800 431-9643 for all others).

Canadian Pacific is a transcontinental railway based in Calgary, Alta.

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