By Angela McDaniels
Tacoma, Wash., Aug. 21 – CVS Caremark Corp. announced the early results of its tender offers, set pricing and increased the maximum tender offer amount, according to a company news release.
The company is tendering 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 $2 billion – increased from $1.5 billion – principal amount of the maximum tender offer notes less the principal amount of the 6.25% notes tendered.
The amounts of notes tendered as of 5 p.m. ET on Aug. 20, the early tender date, are noted in the first table below.
Based on the amount of 6.25% notes tendered so far, the amount available to purchase the other three series of notes is $1,453,090,000. The amount of maximum tender offer notes tendered so far is $1,823,220,000.
The total considerations per $1,000 principal amount of notes are noted in the second table. Pricing was set at 11 a.m. ET on Aug. 20 using the yield to maturity of a U.S. Treasury reference security plus a fixed spread.
The total consideration for each series of notes includes an early tender payment of $30 for each $1,000 principal amount of notes tendered by the early tender date.
The company also will pay accrued interest up to but excluding the settlement date.
The offer began Aug. 7 and will end at 11:59 p.m. ET on Sept. 4.
The company said the purpose of the tender offers is to refinance a portion of its outstanding debt to take advantage of favorable interest rates by lowering overall interest expense and to improve earnings and cash flow going forward.
The tender offers are conditioned on the company obtaining financing but are not conditioned on any minimum principal amount of notes being tendered.
As previously reported, CVS Caremark priced $850 million of 2.25% five-year notes at 99.944 to yield 2.262%, or Treasuries plus 65 basis points, and $650 million of 3.375% notes due 2024 at 99.078 to yield 3.485%, or Treasuries plus 105 bps, on Aug. 7.
Barclays (800 438-3242 or 212 528-7581) and RBS Securities, Inc. (877 297-9832 or 203 897-6145) are the dealer managers. D.F. King & Co., Inc. (800 549-6746 or, for banks and brokers only, 212 269-5550) is the tender and information agent.
CVS Caremark is a pharmacy retailer based in Scarsdale, N.Y.
Early results of CVS Caremark tender offers
| Notes | Amount outstanding | Amount tendered Percent tendered | Priority level
|
| 6.25% senior notes due 2027 | $1 billion | $546.91 million | 54.69% | 1
|
| 6.125% senior notes due 2039 | $1.5 billion | $765,755,000 | 51.05% | 2
|
| 5.75% senior notes due 2041 | $950 million | $456,804,000 | 48.08% | 3
|
| 5.75% senior notes due 2017 | $1,310,308,000 | $600,661,000 | 45.84% | 4
|
|
|
| Pricing
|
| Notes | Reference Treasury | Reference yield | Fixed spread | Total consideration
|
| 6.25% senior notes due 2027 | 2.5% notes due May 15, 2024 | 2.406% | 115 bps | $1,274.60
|
| 6.125% senior notes due 2039 | 3.625% notes due Feb. 15, 2044 | 3.218% | 110 bps | $1,274.76
|
| 5.75% senior notes due 2041 | 3.625% notes due Feb. 15, 2044 | 3.218% | 112 bps | $1,219.62
|
| 5.75% senior notes due 2017 | 0.875% notes due July 15, 2017 | 0.900% | 15 bps | $1,216.17
|
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