Lloyds Banking Group provides final results of dollar exchange offer

Chicago, Dec. 10 – Lloyds Banking Group plc announced the results of its offer to exchange fixed-rate reset subordinated debt securities due 2046 with a call date in 2041 with a cash consideration and dividends or interest for existing preference shares or subordinated notes.

The offer expired at 11:59 p.m. ET on Dec. 9.

The bank was also conducting a contemporaneous tender offers for three series of sterling-denominated preference shares.

Dollar exchange offer

Lloyds was offering to exchange fixed-rate reset subordinated debt securities due Dec. 14, 2046 with a call date in 2041 plus, if applicable, a cash consideration, along with accrued dividends or interest in cash, plus cash amounts in lieu of any fractional new notes for:

• Any and all of two series of preference shares and one series of subordinated notes; and

• Up to a $750 million principal amount of two series of subordinated debt securities.

Under the any-and-all portion, Lloyds will accept for exchange the following amounts:

• $325.82 million of the $374.81 million outstanding 6.413% non-cumulative fixed-to-floating series 1 preference shares (ISIN: US539439AC38, USG5533WAA56) with a call date on Oct. 1, 2035, with the exchange consideration at $1,306.88 based on the 1.25% U.S. Treasury due Aug. 15, 2031 and a fixed spread of 107 basis points and with a cash consideration of $146 per $1,000 principal amount, to leave $48.99 million left after the exchange offer;

• $396,723,000 of the $434.35 million outstanding 6.657% non-cumulative fixed-to-floating series 2 preference shares (ISIN: US539439AF68, US539439AE93) with a call date on May 21, 2037, with the exchange consideration at $1,386.95 based on the 1.75% U.S. Treasury due Aug. 15, 2041 and a fixed spread of 83 bps and with a cash consideration of $110 per $1,000 principal amount, to leave $37,627,000 after the exchange offer;

• $164,967,000 of the $466,113,000 outstanding 6% subordinated notes due Nov. 1, 2033 (ISIN: US4041A2AF14, US4041A3AG79) issued by HBOS plc, with the exchange consideration at $1,220.34 based on the 1.25% U.S. Treasury due Aug. 15, 2031 and a fixed spread of 100 bps and with a cash consideration of $145 per $1,000 principal amount, to leave $301,146,000 after the exchange offer.

Under the capped part, Lloyds will not be accepting any of the securities from the offer to exchange up to a cap amount of the following:

• $1 billion outstanding 4.5% fixed-rate subordinated debt securities due Nov. 4, 2024 (ISIN: US53944YAA10), with the exchange consideration at $1,086.06 based on the 0.75% U.S. Treasury due Nov. 15, 2024 and a fixed spread of 50 bps and with no cash consideration; and

• $1,327,685,000 outstanding 4.582% subordinated debt securities due Dec. 10, 2025 (ISIN: US539439AM10), with the exchange consideration at $1,109.10 based on the 1.125% U.S. Treasury due Oct. 31, 2026 and a fixed spread of 50 bps and with no cash consideration.

The cap amount was a principal amount of existing notes that would result in $750 million principal amount of new notes being issued under the exchange offer, after taking into account the amount of new notes to be issued under the any-and-all part of the offer.

As the amount of securities tendered under the any-and-all offer is $750 million or more, all of those tendered securities will be accepted but no capped offer notes will be accepted.

The exchange offer was subject to a minimum of $500 million of new notes being issued in exchange for the existing securities.

The minimum new issue size condition has been satisfied. The company issued $1,175,176,000 of new notes.

Pricing for the new notes, announced as a 3.369% interest rate, is based on the 1.75% U.S. Treasury due Aug. 15, 2041 and a spread of 150 bps. The notes were issued at par. The reset coupon is the five-year U.S. Treasury rate plus 150 bps. The notes will be callable from and including Sept. 14, 2041 to and including Dec. 14, 2041.

The exchange consideration for each series and the coupon for the new notes was determined at 10 a.m. ET on Dec. 7.

Settlement is expected to occur on Dec. 14.

The global coordinators and joint lead dealer managers for the exchange offer are BofA Securities, Inc. (+44 20 7996 5420, 888 292-0070, 980 387-3907, DG.LM-EMEA@bofa.com), Credit Suisse Securities (USA) LLC (+44 20 7883 8763, 212 538-2147, 800 820-1653, liability.management@credit-suisse.com) and Lloyds Securities Inc. (212 827-3145, NALSIBondSyndicate@lbusa.com).

Lucid Issuer Services Ltd. (+44 20 7704 0880, lbg@lucid-is.com, https://deals.lucid-is.com/lbg-us) is the exchange agent.

The retail and commercial bank is based in Edinburgh, U.K., with operational headquarters in London.

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