NRAM prices tender offer for €2 billion 3 7/8% covered bonds due 2020

By Susanna Moon

Chicago, April 30 – NRAM plc said it priced the tender offer for its €2 billion of 3 7/8% series 3 tranche 1 covered bonds due 2020.

The purchase price was set at 121.494, with an early redemption amount of 119.494, according to a company notice.

The purchase yield is negative 0.013%.

Pricing was set 9 a.m. ET on April 30 on April 30 using the 2¼% DBR due September 2020 plus 0 basis points, with an expected settlement date of May 8.

Holders who tendered their bonds by noon ET on April 17, the early tender date, will receive the cash purchase price plus a 200-bps premium.

The purchase price equals the value of all remaining payments of principal and interest up to and including the scheduled maturity date, discounted to the settlement date at a discount rate equal to the purchase yield.

Those who tender their notes after the early tender deadline will not receive the 200-bps premium.

The company previously said that holders of more than two-thirds had given their consents to amend the notes as of the early tender deadline.

As a result, NRAM expected the meeting set for May 7 to be quorate.

Bondholders for at least two-thirds of the principal amount outstanding must be represented at the meeting. To pass, the measure requires a majority of at least three-fourths of the votes cast at the meeting.

The tender offer will end at 6 a.m. ET on May 5. The offer began March 30.

More offer details

As previously announced, the company is seeking holder approval at the meeting to allow the company to redeem all of the remaining covered bonds after the tender offer at the tender offer purchase price, less the early tender premium, plus accrued interest.

The corresponding covered bond swap agreements will also be amended to provide for the early termination of the swap agreements for the early redemption of the bonds, the company had noted.

The proposal would reduce the duration of the company’s liabilities through the purchase by the company of some of its longer-dated securities and to reduce the future asset requirement of the program, the release had said.

Citigroup Global Markets Ltd. (44 20 7986 8969, attn: liability management group, or liablitymanagement.europe@citi.com) and HSBC Bank plc (44 20 7992 6237, attn: liability management group, or liability.management@hsbcib.com) are the dealer managers. The tender agent is Citibank, NA, London Branch (44 20 7508 3867, attn: exchange team, or exchange.gats@citi.com).

Since October 2010, the company has been managed as part of UKAR, or UK Asset Resolution Ltd., a holding company established by the government to manage the publicly owned mortgages of Northern Rock (Asset Management), now known as NRAM, together with Bradford & Bingley and its subsidiary Mortgage Express.

The company is based in Bingley, England.

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