International Paper wraps oversubscribed tender for five note series

By Susanna Moon

Chicago, June 12 – International Paper Co. announced the results of its oversubscribed tender offer for up to $1 billion of four series of its notes as well as one series of notes issued by wholly owned subsidiary Temple-Inland, Inc.

The tender offer ended at 11:59 p.m. ET on June 11.

The breakdown for the tendered notes is as follows, with notes listed in order of priority acceptance level:

• $377,264,000, or 37.73%, of the $1 billion of 7.5% notes due 2021;

• $255,481,000, or 28.29%, of the $903,191,000 of 7.95% notes due 2018;

• $160,917,000, or 69.63%, of the $231,096,000 of 6.625% notes due 2018;

• $127,972,000, or 30.13%, of the $424,719,000 of 9.375% notes due 2019; and

• $446,763,000, or 49.64%, of the $900 million of 4.75% notes due 2022.

The company accepted for purchase tenders for all of the first four series of notes. Because the tendered amounts exceeded the offer cap, the company purchased about $78,366,000 of the 4.75% notes using a proration factor of about 17.58%, according to a company press release.

The company began the tender offer for up to $750 million of the notes on May 14 and then said on May 28 that it had increased the tender cap to $1 billion.

International Paper also extended the early tender deadline to 11:59 p.m. ET on June 11 from 5 p.m. ET on May 28. Withdrawal rights expired as of 11:59 p.m. ET on May 28.

Pricing details

As previously announced, pricing was set at 2 p.m. ET on May 28 using the yield of the bid-side price of the reference U.S. Treasury security.

The total purchase price for each $1,000 principal amount of notes is as follows:

• $1,264.51 for the 7.5% notes due 2021 using the 1.375% Treasury note due April 30, 2020 plus 130 basis points for a tender yield of 2.804%;

• $1,184.29 for the 7.95% notes due 2018 using the 0.75% Treasury note due April 15, 2018 plus 70 bps for a tender yield of 1.646%;

• $1,128.52 for the 6.625% notes due 2018 issued by Temple-Inland using the 0.75% Treasury note due April 15, 2018 plus 60 bps for a tender yield of 1.546%;

• $1,128.52 for the 9.375% notes due 2019 using the 1.375% Treasury note due April 30, 2020 plus 75 bps for a tender yield of 2.254%; and

• $1,115.61 for the 4.75% notes due 2022 using the 2% Treasury note due Feb. 15, 2025 plus 70 bps for a tender yield of 2.836%.

The total purchase price for each series of notes included a $30.00 early tender premium per $1,000 principal amount of notes tendered by the early date.

Those who tendered after the early deadline will receive the total amount less the early premium.

Holders will also receive accrued interest to but excluding the settlement date of June 12.

As previously noted, the tender offer was conditioned on International Paper securing enough proceeds to fund the offer from a concurrent public offering of senior debt securities by the early tender deadline. International Paper priced $2 billion of bonds on May 14, according to Prospect News.

J.P. Morgan Securities LLC (800 834-4666 or 212 834-4811), BofA Merrill Lynch (888 292-0070 or 980 387-3907), Credit Agricole Securities (USA) Inc. (866 807-6030 or 212 261-7802) and BNP Paribas Securities Corp. are the dealer managers. Global Bondholder Services Corp. (866 470-4200 or 212 430-3774) is the depositary and information agent.

International Paper is a packaging and paper manufacturing company based in Memphis.

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