Reynolds American to buy $2.69 billion of its notes in tender offer

New York, March 4 – Reynolds American Inc. announced that it will buy $2,691,896,000 of notes in its cash tender offer for debt from seven series.

In total the company will pay $2,809,999,967.83 for the notes, in line with the $2.81 billion cap for the offer, an amount increased by $10 million on Feb. 19.

Reynolds will buy notes as follows:

• All $827,053,000 that were tendered of its $1 billion of 4.75% senior notes due 2042, accounting for 82.71% of the amount outstanding. The issue had acceptance priority level 1. Reynolds will pay $1,036.97 per $1,000 principal amount, set using the 2.875% Treasury note due Aug. 15, 2045 plus 190 basis points;

• All $941,516,000 that were tendered of its $1.1 billion of 3.25% senior notes due 2022, making up 85.59% of the amount outstanding. The issue had acceptance priority level 2. Reynolds will pay $1,040.72 per $1,000 principal amount, set using the 1.375% Treasury note due Jan. 31, 2021 plus 135 bps;

• All $441,135,000 that were tendered of its $473,689,000 of 3.75% senior notes due 2023, or 93.76% of the amount outstanding. The issue had acceptance priority level 3. Reynolds will pay $1,059.18 per $1,000 principal amount, set using the 2.25% Treasury note due Nov. 15, 2025 plus 105 bps;

• $479,192,000 of the $1,039,383,000 tendered of its $1.25 billion of 3.25% senior notes due 2020. The accepted amount is 38.34% of the notes outstanding. The issue had acceptance priority level 4. Reynolds will pay $1,047.80 per $1,000 principal amount, set using the 1.375% Treasury note due Jan. 31, 2021 plus 85 bps;

• None of the $1 billion of 4% senior notes due 2022. Holders had tendered $766,216,000 of the debt. The issue had acceptance priority level 5. Pricing was set at $1,088.01 per $1,000 principal amount using the 1.375% Treasury note due Jan. 31, 2021 plus 125 bps;

• None of the $2.5 billion of 4.45% senior notes due 2025. Holders had tendered $1,772,798,000. The issue had acceptance priority level 6. Pricing was set at $1,100.73 per $1,000 principal amount using the 2.25% Treasury note due Nov. 15, 2025 plus 140 bps; and

• None of the $550 million of 4.85% senior notes due 2023. Holders had tendered $415,554,000. The issue had acceptance priority level 7. Pricing was set at $1,134.33 per $1,000 principal amount using the 2.25% Treasury note due Nov. 15, 2025 plus 110 bps.

Settlement for the notes accepted was on Feb. 22.

Because the offer was oversubscribed by the early tender date, no notes were accepted after that deadline.

Pricing for the tender was announced on Feb. 19 and Reynolds said on that date that investors had tendered $6.2 billion of its $7,873,689,000 principal amount of outstanding notes issued in seven series as of 5 p.m. ET on Feb. 18, the early tender date.

Reynolds was offering to purchase a maximum amount of notes that it can purchase for up to $2.81 billion in cash, excluding accrued interest to but excluding the settlement date. The offer began on Feb. 4.

The tender offer ended at 11:59 p.m. ET on March 3.

Holders who tendered their notes by the early tender date received the total consideration, which includes a $30 early tender premium per $1,000 principal amount.

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

Tenders were accepted only in principal amounts equal to $2,000 and integral multiples of $1,000 after that.

Goldman Sachs & Co. (800 828-3182), Citigroup Global Markets Inc. (800 558-3745), Credit Suisse Securities (USA) LLC (800 820-1653) and J.P. Morgan Securities LLC (866 834-4666) are the lead dealer managers. D.F. King & Co., Inc. (212 269-5550, 877 283-0324 or rai@dfking.com) is the tender agent and information agent.

The company previously said it also called for redemption on March 5 its $700 million outstanding principal amount of 6.75% senior notes due 2017 and its $250 million outstanding principal amount of 7.75% senior notes due 2018.

Reynolds American is a Winston-Salem, N.C.-based manufacturer and seller of cigarettes and other tobacco products.

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