By Cristal Cody
Chicago, March 10 – Discovery, Inc. announced the $30 billion pricing on Wednesday for new senior notes (Baa3/BBB-/BBB-) in 11 tranches from Magallanes, Inc., a wholly owned subsidiary of AT&T Inc., according to a press release with extra information from a market source earlier in the day.
Details on the spread pricing emerged on Thursday.
2024
The first three parts of the Rule 144A and Regulation S deal all came with a March 15, 2024 maturity date.
The sale included $500 million of floating-rate notes, the single floater in the transaction. The coupon will be based on SOFR plus a 178 basis points spread.
The deal also included $1.75 billion of 3.428% senior notes and $500 million of 3.528% senior notes due 2024.
The 3.428% notes priced at Treasuries plus 175 bps. The 3.528% notes came with a spread of Treasuries plus 185 bps.
The floater cannot be redeemed early.
The other two can be redeemed early, but the second two-year fixed-rate tranche had one year at a make-whole and then a par call.
The floater was being talked at SOFR plus an equivalent spread. The fixed-rate tranches had talk in the Treasuries plus 190 bps area for the first fixed tranche and in the Treasuries plus 200 bps area for the tranche with a par call.
2025
Next, there are two notes due March 15, 2025.
The first three-year part priced as $1.75 billion of 3.638% senior notes, at a spread of Treasuries plus 180 bps.
The other 2025 note was sold as $500 million of 3.788% senior notes due 2025, with a spread of Treasuries plus 195 bps.
The first three-year fixed-rate tranche came with a make-whole call all the way through and was being talked in the Treasuries plus 195 bps area.
The second fixed-rate tranche has a make-whole call for the first two years and then an optional par call in the third year and had talk in the Treasuries plus 210 bps area.
2027
The company sold $4 billion of 3.755% senior notes due 2027 with a spread of Treasuries plus 190 bps.
There is a make-whole call option and then a quick one-month par call option before maturity. Talk for the tranche was in the Treasuries plus 210 bps area.
2029, 2032, 2042
Magallenes is issuing $1.5 billion of 4.054% notes due 2029, priced at a spread of Treasuries plus 215 bps.
There will be a make-whole call and then a par call two months before the maturity date. Talk was in the Treasuries plus 235 bps area.
A 10-year note priced out as $5 billion of 4.279% senior notes due 2032, coming with a spread of Treasuries plus 235 bps.
It was is being talked in the Treasuries plus 250 bps area. It will also have a make-whole call and then a par call three months before the maturity date.
20-year notes were packaged as $4.5 billion of 5.05% senior notes due 2042. The spread priced as Treasuries plus 265 bps
The tranche is also mostly call protected with a make-whole option until six months before the maturity date. Talk had it coming in the Treasuries plus 285 bps area.
2052, 2062
The largest allocation was in the $7 billion of 5.141% senior notes with a 30-year tenor. Talk was in the Treasuries plus 300 bps area. The notes came 20 bps lower at Treasuries plus 280 bps.
The longest-dated series is the $3 billion of 5.391% notes due 2062. The 40-year series was being talked in the Treasuries plus 325 bps area, but came 20 bps lower at Treasuries plus 305 bps.
Both have make-whole calls all the way through until six months before their respective maturity dates.
Details
On all of the notes, any change of control would make the notes putable at 101.
There is a special mandatory redemption if the merger is not completed by July 15, 2023. The notes will be redeemed at 101 in that case.
J.P. Morgan Securities LLC and Goldman Sachs & Co. LLC are joint global coordinators. Barclays is an additional joint bookrunners but is not involved on the two longest-dated tranches.
The notes priced after two days of investor calls earlier in the week.
The notes are being offered in connection with the combination of Discovery and the business, operations and activities that constitute a portion of the WarnerMedia segment of AT&T. The transaction is a Reverse Morris Trust-type transaction.
Proceeds will be used to fund a special cash payment to AT&T.
Selling securityholders will receive the notes offered by them from AT&T in exchange for certain outstanding AT&T debt held or acquired by affiliates of the selling securityholders.
Before the transaction is consummated, AT&T will guarantee the notes on a senior basis. After the transaction is completed, the notes will be guaranteed by the new company.
AT&T is a telecommunications services provider based in Dallas. Discovery is a New York-based factual television conglomerate. After the transaction is completed, Discovery will be renamed Warner Bros. Discovery, Inc.
| Issuer: | Magallanes, Inc.
|
| Amount: | $30 billion
|
| Issue: | Senior notes
|
| Bookrunners: | J.P. Morgan Securities LLC, Goldman Sachs & Co. LLC and Barclays (with Barclays not involved on the two longest dated tranches)
|
| Change of control: | At 101
|
| Special mandatory redemption: | At 101
|
| Trade date: | March 9
|
| Settlement date: | March 15
|
| Ratings: | Moody’s: Baa3
|
| S&P: BBB-
|
| Fitch: BBB-
|
| Distribution: | Rule 144A and Regulation S
|
| Marketing: | Investor meetings
|
|
|
| Floaters
|
| Amount: | $500 million
|
| Issue: | Floating-rate senior notes
|
| Maturity: | March 15, 2024
|
| Coupon: | SOFR plus 178 bps
|
| Price talk: | SOFR plus equivalent spread
|
| Cusips: | 55903VAA1, U55632AA8
|
|
|
| 2024 make-whole
|
| Amount: | $1.75 billion
|
| Maturity: | March 15, 2024
|
| Coupon: | 3.428%
|
| Spread: | Treasuries plus 175 bps
|
| Call features: | Make-whole call
|
| Price talk: | Treasuries plus 190 bps
|
| Cusips: | 55903VAC7, U55632AB6
|
|
|
| 2024 with par call
|
| Amount: | $500 million
|
| Maturity: | March 15, 2024
|
| Coupon: | 3.528%
|
| Spread: | Treasuries plus 185 bps
|
| Call features: | Make-whole call then one year at par
|
| Price talk: | Treasuries plus 200 bps area
|
| Cusips: | 55903VAB9, U55632AK6
|
|
|
| 2025
|
| Amount: | $1.75 billion
|
| Maturity: | March 15, 2025
|
| Coupon: | 3.638%
|
| Spread: | Treasuries plus 180 bps
|
| Call features: | Make-whole call
|
| Price talk: | Treasuries plus 195 bps area
|
| Cusip: | 55903VAE3, U55632AC4
|
|
|
| 2025 with par call
|
| Amount: | $500 million
|
| Maturity: | March 15, 2025
|
| Coupon: | 3.788%
|
| Spread: | Treasuries plus 195 bps
|
| Call features: | Make-whole call then one year par call
|
| Price talk: | Treasuries plus 210 bps area
|
| Cusip: | TBD
|
|
|
| 2027
|
| Amount: | $4 billion
|
| Maturity: | March 15, 2027
|
| Coupon: | 3.755%
|
| Spread: | Treasuries plus 190 bps
|
| Call features: | Make-whole call then one month par call
|
| Price talk: | Treasuries plus 210 bps area
|
| Cusip: | 55903VAG8, U55632AD2
|
|
|
| 2029
|
| Amount: | $1.5 billion
|
| Maturity: | March 15, 2029
|
| Coupon: | 4.054%
|
| Spread: | Treasuries plus 215 bps
|
| Call features: | Make-whole call then two months par call
|
| Price talk: | Treasuries plus 235 bps area
|
| Cusip: | 55903VAJ2, U55632AE0
|
|
|
| 2032
|
| Amount: | $5 billion
|
| Maturity: | March 15, 2032
|
| Coupon: | 4.279%
|
| Spread: | Treasuries plus 235 bps
|
| Call features: | Make-whole call then three months par call
|
| Price talk: | Treasuries plus 250 bps area
|
| Cusip: | 55903VAL7, U55632AF7
|
|
|
| 2042
|
| Amount: | $4.5 billion
|
| Maturity: | March 15, 2042
|
| Coupon: | 5.05%
|
| Spread: | Treasuries plus 265 bps
|
| Call features: | Make-whole call then six months par call
|
| Price talk: | Treasuries plus 285 bps area
|
| Cusip: | 55903VAN3, U55632AG5
|
|
|
| 2052
|
| Amount: | $7 billion
|
| Maturity: | March 15, 2052
|
| Coupon: | 5.141%
|
| Spread: | Treasuries plus 280 bps
|
| Call features: | Make-whole call then six months par call
|
| Price talk: | Treasuries plus 300 bps area
|
| Cusip: | 55903VAQ6, U55632AH3
|
|
|
| 2062
|
| Amount: | $3 billion
|
| Maturity: | March 15, 2062
|
| Coupon: | 5.391%
|
| Spread: | Treasuries plus 305 bps
|
| Call features: | Make-whole call then six months par call
|
| Price talk: | Treasuries plus 325 bps area
|
| Cusip: | 55903VAS2, U55632AJ9
|
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