Alstom begins exchange offer for 5% 2006 and subordinated auction rate bonds

By Paul Deckelman

New York, Jan. 31 - Alstom Group said it has begun a public offer to exchange new fixed-rate bonds due 2010 which it will issue for two issues of outstanding bonds - its €650 million 5% bonds due 2006 and its €250 million subordinated auction rate bonds due 2006.

The exchange offer is expected to take the form of a public exchange offer in France, in Luxembourg and (for Swiss residents) in Switzerland, and the new bonds are expected to be listed on Euronext Paris SA and on the Luxembourg Stock Exchange. The offer is not being made in the United States.

The company said the exchange offer for institutional investors will begin at 9 a.m. CET on Feb. 8 and will run through 5 p.m. CET on Feb. 15, while the exchange offer for individual investors will begin at 9 a.m. CET on Feb. 17 and will run through 5 p.m. CET Feb. 24, with all deadlines subject to possible extension. The anticipated settlement date for the new bonds to be issued in exchange for the existing bonds is March 3.

Alstom, a French-based manufacturer of power generating and transportation equipment, said that it is undertaking its exchange offer to take advantage of favorable market conditions in terms of interest rates and credit spreads, to extend the average maturity of the Alstom Group's debt.

Alstom currently has outstanding a total of 652,500 of the existing bonds for which it will offer to exchange the new debt - 650,000 of the 5% bonds due July 2006, which were issued in a denomination of €1,000 each, and 2,500 subordinated auction rate bonds due in September 2006, issued in a denomination of €100,000 each.

Bondholders submitting their existing bonds for exchange will receive (a) a number of new bonds calculated on the basis of the exchange prices (excluding accrued interest) of the existing bonds submitted and (b) the accrued interest on those bonds, payable in cash.

Alstom said it would determine the exchange prices, excluding interest, of the existing bonds at 4 p.m. CET on Feb. 16, using a formula based on an exchange spread over the yield of a French Treasury note reference security for the 5% bonds and using a formula based on the three-month Euribor rate and an exchange spread for the subordinated auction rate bonds.

The company will also at that time determine the issue price and the coupon of the new bonds that are being exchanged for the existing bonds, using an exchange spread over the yield of a French Treasury note reference security. As the coupon will be quoted in increments of 1/8 point, or 0.125%, the coupon of the new bonds will be such incremental rate which is directly below the yield of the new bonds. Accordingly, the issue price of each new bond, rounded to the third decimal place, will be slightly below par, with the difference between the coupon and the yield of the new bonds being a maximum of 0.124%.

Alstom said that it will determine the exchange spreads on the basis of factors including Alstom risk premium and the terms and conditions of each issue. The final exchange spreads for use in the offer and the new bond spreads will be determined on Feb. 7, the day before the offer begins for institutional investors.

Terms of the exchange offer will be submitted to AMF, the French investment authorities, for its approval.

Alstom reserves the right to withdraw its exchange offer at the end of the offer period for institutional investors in the event that the total principal amount of existing bonds submitted for exchange by such institutional investors amounts to less than €300 million. It said that any such decision to withdraw the offer would be published in a notice of Euronext Paris SA and in a news release that would be published on the respective websites of the AMF and Alstom on Feb. 16, the day after the institutional offer is scheduled to end, and in a news release in La Tribune on Feb. 17.

Alstom also said that it reserved the right to issue, for cash, additional new bonds, on the same terms as the bonds being issued in the exchange offer, depending on market conditions. Such additional bonds would not be available to the public and would be issued in a private placement and would form part of the same series as the new bonds issued in the exchange offer. Proceeds from any such sale of additional bonds would be used for the general corporate purposes of the Alstom Group.

BNP Paribas (call +33 1 42 98 17 90 or +44 207 595 8668) and Merrill Lynch International (call +33 1 53 65 58 76 or +44 207 995 3715) will be the dealer managers for the bond exchange and the book-running manager for the issue of the new bonds, and BNP Paribas Securities Services in Paris (call +33 (0)1 55 77 61 60, or contact by fax at +33 (0)1 55 77 95 53) and BNP Paribas Securities Services, Luxemboug Branch (call +352 2696 2549 or +352 2696 2518, or contact by fax at +352 2696 9757) will be the exchange agents.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.