Japan Tobacco begins tender offers for three series of senior notes due 2023, 2026 and 2028

By Rebecca Melvin

Concord, N.H., Aug. 31 – Japan Tobacco Inc. has launched tender offers for its $525 million 3.5% guaranteed notes due 2023, $500 million 2.8% senior notes due 2026 and $500 million 3.875% guaranteed notes due 2028, according to a notice on Monday.

The company is also planning to issue two series of dollar notes under its $7 billion euro medium-term note program.

Standard Chartered Bank is the tender’s offeror. It is offering to purchase any and all of the outstanding 2023 notes (ISIN: XS1883352681) and up to $500 million across the 2026 notes (ISIN: XS1394761073), which were issued by Japan Tobacco, and the 2028 notes (ISIN: XS1883352764), which were issued by JT International Financial Services BV. JT International also issued the 2023 notes.

The capped tender offers may be “significantly” increased or decreased at the offeror’s discretion, according to the notice.

The tender offer expires at 11 a.m. ET on Sept. 7. Scaling may apply if the maximum capped tender offer acceptance amount is exceeded.

The purchase price of the 2023 and 2026 notes will be calculated relative to their first par call dates on Aug. 28, 2023, and Jan. 13, 2026, respectively, and at a purchase spread of Treasuries plus 10 basis points and 20 bps, respectively. The hypothetical purchase price for the 2023 notes is 106.472, and the hypothetical purchase price for the 2026 notes is 107.922, based on pricing at around 10 a.m. ET on Aug. 27.

The purchase price for the 2028 notes is being calculated relative to their first par call date on June 28, 2028 with a spread of 30 bps over the relevant Treasury. The hypothetical purchase price is 114.338.

The purpose of the offers and a proposed issue of new notes is to optimize and extend the company’s debt maturity profile without increasing the group’s total gross debt.

Following the offers, the company plans to redeem the remaining 2023 notes relevant to the make-whole redemption price and the remaining 2026 notes according to their relevant price if the capped tender amount is less than $500 million.

The tender settlement date is expected to be Sept. 13.

Merrill Lynch International (+44 20 7996 5420, DG.LM-EMEA@bofa.com) and Standard Chartered Bank (+44 20 7885 5739, liability_management@sc.com) are the dealer managers of the notes, and Morrow Sodali Ltd. is the information and tender agent.

The cigarette maker is based in Tokyo.

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