International Paper prices tender offer for 9.375% notes, 7.95% notes

By Angela McDaniels

Tacoma, Wash., June 17 – International Paper Co. determined the prices it will pay in the tender offer for up to $1 billion combined principal amount of its outstanding 9.375% notes due 2019 and 7.95% notes due 2018, according to a company news release.

For each $1,000 principal amount of notes, the company will pay $1,321.22 for the 9.375% notes and $1,225.11 for the 7.95% notes. These payments include a $30.00 early tender premium for each note tendered by the early tender deadline, 5 p.m. ET on June 16.

The prices were determined using the bid-side price of the 1.5% Treasury due May 31, 2019 at 2 p.m. ET on June 17 plus a fixed spread of 65 basis points for the 9.375% notes and 30 bps for the 7.95% notes.

The reference security yield to maturity is 1.748%, and the tender yield is 2.398% for the 9.375% notes and 2.048% for the 7.95% notes.

The company will also pay accrued interest up to but excluding the applicable settlement date, which was expected to be June 18 for notes tendered by the early tender deadline and will be July 3 for notes tendered after the early deadline but by the final deadline.

The company had received tenders for $434,027,000, or 50.53%, of its $858,918,000 outstanding 9.375% notes and for $522,982,000, or 36.6%, of its $1,428,923,000 outstanding 7.95% notes as of the early tender deadline.

The offer began June 3 and will end at 11:59 p.m. ET on July 1.

International Paper previously said it reserves the right, but is not obligated, to increase the tender cap by up to $250 million.

Tendered notes will be accepted with priority given to the 9.375% notes. The company said it may accept tendered notes of one or more of the series on a pro rata basis.

Because the offer was not fully subscribed as of the early tender deadline, additional notes will be accepted for purchase in the following order: 9.375% notes tendered after the early tender deadline and before the expiration time and then 7.95% notes tendered after the early deadline and prior to the expiration time.

The tender offer is conditioned on International Paper obtaining proceeds from a concurrent public offering of senior debt securities in an amount not less than $1 billion on or before the early settlement date.

As previously reported, the company priced $1.6 billion of senior notes (Baa2/BBB/) in tranches due 2024 and 2044 on June 3.

Citigroup Global Markets Inc. (800 558-3745 or 212 723-6106), Deutsche Bank Securities Inc. (866 627-0391 or 212 250-2955), HSBC Securities (USA) Inc. and UBS Securities LLC are the dealer managers for the tender offer. Global Bondholder Services Corp. (866 470-3700 or 212 430-3774) is the depositary and information agent.

Based in Memphis, International Paper manufactures industrial and consumer packaging and uncoated papers.

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