Anglian Water Services sets new issue spread range for exchange offers

By Angela McDaniels

Tacoma, Wash., July 11 - Anglian Water Services Financing plc set the new issue spread range for its exchange offer at 270 basis points to 285 bps, according to a company news release.

On July 7, the company began an exchange offer for its £275 million of fixed-to-floating-rate guaranteed class B unwrapped bonds due 2037 and its £100 million of fixed-to-floating-rate guaranteed class B unwrapped bonds due 2024.

The exchange offer will be subject to a cap that has not yet been set. The cap will be no greater than £375 million.

Also on July 7, BNP Paribas began a separate cash tender offer for the bonds. The tender prices will be calculated in the same way as the exchange prices.

In the exchange offer, Anglian Water is offering sterling-denominated fixed-to-floating-rate guaranteed class B unwrapped bonds due 2037 in exchange for the existing bonds. The new bonds will be issued under the company's €10 billion global secured medium-term bond program and will be guaranteed by Anglian Water Services Ltd., Anglian Water Services Holdings Ltd. and Anglian Water Services Overseas Holdings Ltd.

Beginning Oct. 3, 2021, the interest rate for the new bonds will be Libor plus 750 bps.

The amount of new bonds to be issued for each bond exchanged will equal the exchange price for that series of bonds divided by the new issue price.

The exchange price will be based on a fixed spread over a reference security. The spread is 175 bps for the existing bonds due 2037 and 200 bps for the bonds due 2024.

The company said the new issue price will be as close as possible to par, adjusted to allow for rounding down of the new fixed-rate coupon to the nearest 0.125%.

The new issue spread will be set on July 13, and the new issue price and the new fixed-rate coupon will be set on July 14.

Anglian Water plans to issue additional new bonds for cash. The exchange offer is conditioned on the issuance of a combined £200 million of the new bonds between the exchange offer and the cash offering.

In the tender offer, BNP Paribas will not accept an amount of bonds that is greater than the issue size of the new bonds.

Holders must tender at least £1,000 of the existing 2037 bonds or at least £50,000 of the 2024 bonds in order to participate in the exchange offer.

In addition, holders must tender enough bonds for exchange to result in the issuance of at least £50,000 of new bonds. Holders who tender their bonds for exchange and who do not meet this condition will be deemed to have tendered their bonds for cash.

The company and BNP Paribas plan to accept bonds tendered for exchange before accepting bonds tendered for cash, and the 2037 bonds tendered for cash will have priority over 2024 bonds tendered for cash.

The offers will expire at 11 a.m. ET on July 13. The settlement date is expected to be July 18 for the tender offer and July 21 for the exchange offer.

The dealer managers are BNP Paribas (44 20 7595 8668 or liability.management@bnpparibas.com), HSBC Bank plc (44 20 7991 1444 or liability.management@hsbcib.com), Lloyds TSB Bank plc (44 20 7158 3981 or liability.management@lloydsbanking.com) and Royal Bank of Scotland plc (44 20 7085 8056 or liabilitymanagement@rbs.com). The exchange and tender agent is Lucid Issuer Services Ltd. (44 20 7704 0880 or anglianwater @lucid-is.com).

Anglian Water is a Huntingdon, England-based water company.

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