NiSource ups cap, gets tenders for $272.9 million of 10.75% notes; no 6.8% notes to be accepted

By Jennifer Chiou

New York, Dec. 14 - NiSource Inc. subsidiary NiSource Finance Corp. announced that it has thus far obtained tenders for $272.9 million of its $600 million of 10.75% notes due 2016 in the offer for up to $325 million of the securities.

Previously, the company was tendering for up to $250 million of the notes.

Because of the amount of tenders received so far, NiSource said it will accept for purchase all tendered 10.75% notes up to the new cap and will no longer purchase any of the $500 million of 6.8% notes due 2019 previously involved in the offer.

The company also extended the early participation deadline to 11:59 p.m. ET on Dec. 29 from 5 p.m. ET on Dec. 14.

The offer will still end at 11:59 p.m. ET on Dec. 29.

For each $1,000 principal amount, the company will pay $1,337.10 for the 10.75% notes, which includes the early tender payment of $30.00 for all tendering holders. It would have paid $1,151.04 for the 6.8% notes.

The purchase prices were determined by reference to the fixed spread over the yield to maturity of the applicable U.S. Treasury security at 2 p.m. ET on Dec. 14.

The applicable U.S. Treasury security was the 1.375% Treasury due Nov. 30, 2015 for the 10.75% notes and the 2.625% Treasury due Nov. 15, 2020 for the 6.8% notes. The spread was 160 basis points for the 10.75% notes and 115 bps for the 6.8% notes. They were previously 190 bps for the 10.75% notes and 145 bps for the 6.8% notes.

Holders will also receive accrued interest up to but excluding the settlement date.

The offer is subject to the satisfaction or waiver of conditions that include the issuance by NiSource Finance of at least $250 million principal amount of a new series of long-term debt securities. The proceeds will be used to fund a portion of the tender offer. The company closed a $250 million offering of 6.25% notes due 2040 on Dec. 8.

The dealer managers for the tender offer are Deutsche Bank Securities Inc. (212 250-2955 or 866 627-0371) and RBS Securities Inc. (203 897-6145 or 877 297-9832). The information agent is Global Bondholder Services Corp. (212 430-3774 for banks and brokers, others call 866 952-2200).

NiSource is an electricity and natural gas company based in Merrillville, Ind.

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