Target sets 145.117 price for 6.5% notes in any and all tender offer

By Angela McDaniels

Tacoma, Wash., April 8 – Target Corp. said the total consideration will be $1,451.17 for each $1,000 principal amount of 6.5% notes due 2037 tendered in its any and all tender offer.

The price was set by reference to the yield of the bid-side price of the 3% Treasury due Nov. 15, 2045 as of 2 p.m. ET on April 8, which was 2.548%, plus a spread of 95 basis points, according to a company news release.

As previously reported, the company is offering to buy back eight series of its notes in three tender offers.

First, the company is tendering for any and all of its $1,145,441,000 outstanding 6.5% notes due 2037. This offer was scheduled to end at 5 p.m. ET on April 8.

Second, the company is offering to purchase a maximum amount of five series of long-dated notes and a maximum amount of two series of short-dated notes in two tender offers scheduled to expire at 11:59 p.m. ET on April 29.

The maximum payment amount for the long-dated notes is $1 billion less the aggregate total consideration paid for the 6.5% notes in the any and all tender offer.

The maximum payment amount for the short-dated notes is $800 million less the amount, if any, by which the aggregate total consideration for the 6.5% notes tendered in the any and all tender offer exceeds $1 billion.

Eligible for the long-dated tender offer are the company’s $868,577,000 outstanding 7% notes due 2038, $550 million outstanding 6.35% debentures due 2032, $218,332,000 outstanding 7% debentures due 2031, $115,827,000 outstanding 6.65% debentures due 2028 and $135,479,000 outstanding 6.75% debentures due 2028. They are listed in order of priority acceptance levels

Covered by the short-dated tender offer are the company’s $1.25 billion outstanding 6% notes due 2018, which have an acceptance priority level of 1, and $1 billion outstanding 5.375% notes due 2017, which have an acceptance priority level of two.

Pricing for the maximum tender offers will be set using the yield of the bid-side price of a reference Treasury at 2 p.m. ET on April 18.

The total considerations in the maximum offers each include an early tender premium of $30.00 per $1,000 principal amount of notes tendered by 5 p.m. ET on April 15, the early date.

Holders who tender their notes after the early deadline will receive the total consideration less the early premium.

The company also will pay accrued interest up to but excluding the payment date, which is expected to be April 11 for the any and all offer and May 2 for the maximum offers.

Pricing will be set based on

• The 3% Treasury due Nov. 15, 2045 and a spread of 100 bps for the 7% notes for a hypothetical total purchase price of $1,508.98;

• The 3% Treasury due Nov. 15, 2045 and a spread of 85 bps for the 6.35% debentures for a hypothetical total purchase price of $1,362.49;

• The 3% Treasury due Nov. 15, 2045 and a spread of 85 bps for the 7% debentures for a hypothetical total purchase price of $1,417.17;

• The 1.625% Treasury due Feb. 15, 2026 and a spread of 150 bps for the 6.65% debentures for a hypothetical total purchase price of $1,337.23;

• The 1.625% Treasury due Feb. 15, 2026 and a spread of 150 bps for the 6.75% debentures for a hypothetical total purchase price of $1,333.66;

• The 0.875% Treasury due Jan. 15, 2018 and a spread of 35 bps for the 6% notes for a hypothetical total purchase price of $1,082.08; and

• The 0.5% Treasury due April 30, 2017 and a spread of 12.5 bps for the 5.375% notes for a hypothetical total purchase price of $1,045.49.

As previously reported, Target plans to use the proceeds of its recent offering of notes to fund the tender offer and for general corporate purposes.

The dealer managers are Barclays (800 438-3242 or 212 528-7581), Citigroup Global Markets Inc. (800 558-3745 or 212 723-6106) and J.P. Morgan Securities LLC (866 834-4666 or 212 834-4811). Global Bondholder Services Corp. (866 470-3900 or 212 430-3774) is the tender and information agent.

Target is a discount merchandise retailer based in Minneapolis.

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