Tesco gives pricing, final results of tender offers for eight notes

By Marisa Wong

Morgantown, W.Va., May 1 – Tesco plc announced the final results of its cash tenders offers that expired at 5 p.m. ET on April 30.

Tesco will accept for purchase no 2019 or 2020 notes; £113,561,000 of its 2022 notes, using a scaling factor of 50%, at a purchase price of 112.375; £78.09 million of its 2023 notes at a price of 111.913; £49,808,000 of its 2029 notes at a price of 127.890; £41,234,000 of its 2033 notes at a price of 125.211; £11,299,000 of its 2042 notes at a price of 116.365; and £42.65 million of its 2057 notes at a price of 129.256.

Pricing was set at 8 a.m. ET on May 1.

As announced on April 23, Tesco Corporate Treasury Services plc invited holders of its outstanding €500 million 2 1/8% notes due 2020 guaranteed by Tesco to tender their notes for purchase at 102.786, based on a fixed purchase yield of negative 0.05%.

In addition, Tesco launched separate cash tender offers for the following seven series of its notes:

• £350 million 5½% notes due 2019, of which £96,904,000 principal amount is outstanding, with the purchase price based on the 3.75% U.K. Treasury gilt due Sept. 7, 2019 and a purchase spread of 35 basis points;

• £900 million 6 1/8% notes due 2022, of which £530,554,000 principal amount is outstanding, with the purchase price based on the 4% U.K. Treasury gilt due March 7, 2022 and a purchase spread of 85 bps;

• £515 million 5% notes due 2023, of which £171,064,000 principal amount is outstanding, with the purchase price based on the 0.75% U.K. Treasury gilt due July 22, 2023 and a purchase yield of 95 bps;

• £200 million 6% notes due 2029, of which £97,657,000 principal amount is outstanding, with the purchase price based on the 6% U.K. Treasury gilt due Dec. 7, 2028 and a purchase yield of 175 bps;

• £200 million 5½% notes due 2033, of which £149,855,000 principal amount is outstanding, with the purchase price based on the 4.25% U.K. Treasury gilt due June 7, 2032 and a purchase yield of 180 bps;

• £300 million 4 7/8% notes due 2042, of which £31,574,000 principal amount is outstanding, with the purchase price based on the 4.5% U.K. Treasury gilt due Dec. 7, 2042 and a purchase yield of 210 bps; and

• £500 million 5.2% notes due 2057, of which £72.75 million principal amount is outstanding, with the purchase price based on the 1.75% U.K. Treasury gilt due July 22, 2057 and a purchase yield of 215 bps.

Tesco will also pay accrued interest.

The issuers had said they would accept an aggregate amount of tendered notes such that the total consideration payable does not exceed the gross proceeds of Tesco’s issuance of new notes. At the start of the tender offers, Tesco Corporate Treasury announced plans to issue new sterling-denominated fixed-rate notes to be guaranteed by Tesco under its £15 billion euro note program.

Had the amount of tenders for any series of notes exceeded any applicable tender cap that the company set, the notes were to be accepted for purchase on a pro rata basis, as previously announced.

The tender offers are conditioned on Tesco Corporate Treasury completing the new notes issuance.

Settlement of the tender offers, subject to the financing condition, is expected to occur on May 2.

After settlement, £96,904,000 of the 2019 notes, €500 million of the 2020 notes, £416,993,000 of the 2022 notes, £92,974,000 of the 2023 notes, £47,849,000 of the 2029 notes, £108,621,000 of the 2033 notes, £20,275,000 of the 2042 notes and £30.1 million of the 2057 notes will remain outstanding.

HSBC Bank plc (+44 20 7992 6237, attn.: liability management group, LM_EMEA@hsbc.com), J.P. Morgan Securities plc (+44 20 7134 2468, attn.: liability management; emea_lm@jpmorgan.com), NatWest Markets plc (+44 20 7678 5222, attn.: liability management; liabilitymanagement@natwestmarkets.com) and RBC Europe Ltd. (+44 20 7029 7063, attn.: liability management group, liability.management@rbccm.com) are dealer managers for the tender offers.

Lucid Issuer Services Ltd. (+44 20 7704 0880, attn.: Arlind Bytyqi, tesco@lucid-is.com) is information and tender agent.

Tesco is a grocery and general merchandise retailer based in Welwyn Garden City, England.

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