Consumers Energy scraps exchange offer, fails to meet minimum tenders

By Susanna Moon

Chicago, Nov. 24 – Consumers Energy Co. said it terminated its private offer to exchange up to a total of $250 million of three series of notes after failing to meet the minimum tender condition as of last Thursday.

The offers were conditioned on at least $250 million of new first-mortgage bonds due 2025 being issued in exchange for the old bonds.

That condition had not been met as of 5 p.m. ET on Nov. 20, according to a company press release.

The company had offered to swap out its $500 million of outstanding 6.7% first-mortgage bonds due 2019 and $350 million of outstanding 6.125% first-mortgage bonds due 2019.

The exchange offers had been set to end at midnight ET on Dec. 5. They began on Nov. 6.

The company had extended the early deadline to 5 p.m. ET on Nov. 21 from Nov. 20.

Pricing was moved to Nov. 24.

As reported before, the total exchange payment for each series of old bonds was to be based on a fixed spread over the yield to maturity of the bid-side price of the reference U.S Treasury security.

For the 6.7% bonds, the reference Treasury security was the 1.75% bond due Sept. 30, 2019, and the fixed spread was 50 basis points. For the 6.125% bonds, the reference security and fixed spread were the 1.5% security due March 31, 2019 and 45 bps, respectively.

The coupon for the new bonds was to be set at the same time as the total consideration and would have been equal to the sum of (i) the yield of the 2.375% U.S. Treasury due Aug. 15, 2024 plus a pre-determined spread.

Bondholders who tendered their bonds by the new early participation date were to receive the total exchange consideration, which included an early participation premium of $30.00 per $1,000 of notes. Those who tendered after the early participation date would not have received the early premium.

The total exchange consideration and exchange consideration would have been paid in a principal amount of new bonds equal to the total exchange consideration or exchange consideration, respectively.

The company had planned to pay in cash accrued interest to, but not including, the settlement date, which was expected to be Dec. 11.

The information agent was D.F. King & Co., Inc. (800 515-4479 or 212 269-5550 for banks and brokerage firms).

Consumers Energy is an electric and gas utility based in Jackson, Miss.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.