Kansas City Southern unit completes tender offer for three note series

By Jennifer Chiou

New York, May 8 - Kansas City Southern subsidiary Kansas City Southern de Mexico, SA de CV announced the completion of its tender offers for three series of notes. It accepted the following tenders:

• All $237,202,000 of tenders for its $300 million of 8% senior notes due 2018;

• All $180.97 million of tenders for its $185 million of 6 5/8% senior notes due 2020; and

• $149,685,000 of the $181,872,000 of tenders for its $200 million of 6 1/8% senior notes due 2021.

The tender offers began on April 10 and expired at midnight ET on May 7.

At the early deadline of 5 p.m. ET on April 23, holders had tendered $237,202,000 of 8% notes and the $180.97 million of 6 5/8% notes.

The company funded the offer with a portion of the proceeds from its $725 million offering of senior notes completed on May 3.

Kansas City Southern offered to buy any and all of the 8% notes and 6 5/8% notes and a maximum amount of its $200 million of 6 1/8% senior notes due 2021.

As reported, the total amount paid to holders of the 6 1/8% notes was not to exceed $650 million less the total amount paid to holders in the any and all tender offer, in both cases excluding accrued interest. Acceptance of 6 1/8% notes was subject to proration.

For the early settlement, the company paid a total of $259,619,961 for the 8% notes and $214,065,794 for the 6 5/8% notes.

For each $1,000 principal amount of notes, the total payment was $1,094.51 for the 8% notes, $1,182.88 for the 6 5/8% notes and $1,177.84 for the 6 1/8% notes.

The total considerations included an early tender payment of $30.00 per $1,000 principal amount of notes tendered by the early tender deadline.

Holders also received accrued interest up to but excluding the settlement date. The final settlement date for the 6 1/8% notes was May 8.

The company also solicited consents to amend the indentures governing the 8% notes and 6 5/8% notes to, among other things, eliminate substantially all of the restrictive covenants and some events of default.

As noted, the consents received were enough to make the amendments. Supplemental indentures were executed, and the amendments became operative once a majority of the notes were repurchased.

The total considerations were determined by reference to the yield to maturity of a reference Treasury security as of 2 p.m. ET on April 23 plus a fixed spread.

The reference Treasury was the 0.25% Treasury note due Jan. 31, 2014 for the 8% notes, the 0.25% Treasury note due Dec. 15, 2015 for the 6 5/8% notes and the 1.75% Treasury note due May 31, 2016 for the 6 1/8% notes. The reference yields were 0.123%, 0.303% and 0.361%, respectively.

The spread was 50 basis points for the 8% notes and 6 5/8% notes and 87.5 bps for the 6 1/8% notes.

Each tender offer was subject to a condition that Kansas City Southern de Mexico consummates a debt financing transaction.

The dealer manager and solicitation agent was BofA Merrill Lynch (888 292-0070 or 980 387-3907). The information and tender agent was D.F. King & Co., Inc. (800 829-6551, 212 269-5550 or kcs@dfking.com).

Kansas City Southern is a railroad company based in Kansas City, Mo.

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