CVS Caremark tenders for all 6.25% notes, up to cap for three series

By Susanna Moon

Chicago, Aug. 7 – CVS Caremark Corp. said it began cash tender offers for any and all of its $1 billion of 6.25% senior notes due 2027 and up to a maximum amount of three other series of notes.

The notes covered by the maximum tender offer are the company’s $1.5 billion 6.125% senior notes due 2039, $950 million 5.75% senior notes due 2041 and $1,310,308,000 5.75% senior notes due 2017.

The company is offering to purchase $1.5 billion of the maximum notes less the amount of the 6.25% notes tendered.

The purpose of the tender offers is to refinance a portion of CVS Caremark’s outstanding debt to take advantage of favorable interest rates by lowering overall interest expense and improve earnings and cash flow going forward, according to a company press release.

The total purchase price will include an early tender payment of $30 for each $1,000 principal amount of notes tendered by 5 p.m. ET on Aug. 20, the early tender date.

Pricing will be set at 11 a.m. ET on Aug. 6 using the yield to maturity of the U.S. Treasury reference securities plus a fixed spread as follows:

• The 6.25% notes will be based on the 2.5% U.S. Treasury notes due May 15, 2024 plus 115 basis points;

• The 6.125% notes will be based on the 3.625% U.S. Treasury notes due Feb. 15, 2044 plus 110 bps;

• The 5.75% notes due 2041 will be based on the 3.625% U.S. Treasury notes due Feb. 15, 2044 plus 112 bps; and

• The 5.75% notes due 2017 will be based on the 0.875% U.S. Treasury notes due July 15, 2017 plus 15 bps.

The hypothetical total purchase price per $1,000 principal amount is $1,268.22 for the 6.25% notes, $1,268.82 for the 6.125% notes, $1,213.73 for the 5.75% notes due 2041 and $1,126.11 for the 5.75% notes due 2017.

The tender offers will end at 11:59 p.m. ET on Sept. 4.

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

The tender offers are conditioned on the company obtaining financing but are not conditioned on any minimum principal amount of notes being tendered.

The company is planning to price a benchmark two-part offering of senior notes, as reported by Prospect News on Aug. 7.

Barclays (800 438-3242 or 212 528-7581 collect) and RBS Securities, Inc. (877 297-9832 or 203 897-6145 collect) are the dealer managers. D.F. King & Co., Inc. (800 549-6746 or 212 269-5550 for banks and brokers only) is the tender and information agent.

CVS Caremark is pharmacy retailer is based in Scarsdale, N.Y.

© 2015 Prospect News.
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