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ResCap tenders for $750 million of notes
By Jennifer Chiou
New York, Nov. 21 - Residential Capital, LLC (ResCap) announced the start of a cash tender offer for up to $750 million of four series of notes.
The offer ends at midnight ET on Dec. 19.
Affected notes, in order of acceptance priority level, include ResCap's $1.25 billion of floating-rate notes due June 9, 2008, $500 million of floating-rate notes due Nov. 21, 2008, $750 million of 6 1/8% notes due Nov. 21, 2008 and $1 billion of subordinated floating-rate notes due April 17, 2009.
For each $1,000 principal amount, the company will pay $830.00 for the floaters due June 9, 2008, $760.00 for the floaters due Nov. 21, 2008, $760.00 for the 6 1/8% notes and $500.00 for the floaters due 2009.
The payouts include a $30.00 early tender premium for those who tender by 5 p.m. ET on Dec. 5.
ResCap said it will also pay accrued interest to the settlement date.
The company noted that it may increase the maximum tender amount.
As previously reported, several of ResCap's credit facilities contain a financial covenant requiring it to maintain a minimum consolidated tangible net worth as of the end of each fiscal quarter.
As of Sept. 30, the most restrictive provision requires ResCap to maintain a minimum consolidated tangible net worth of $5.4 billion. ResCap's reported consolidated tangible net worth as of Sept. 30 was $6.2 billion.
The company said that the purchase of the notes in the offer at a discount and the retirement of the notes will increase its income in the fourth quarter of 2007 and its consolidated tangible net worth as of the end of the year, above the levels that would have occurred in the absence of acquiring notes in the offer.
Banc of America Securities LLC (866 475-9886 or call collect 704 386-3244) and Citi (800 558-3745 or call collect 212 723-6106) are the dealer managers. Global Bondholder Services Corp. (866 294-2200) is the information agent and depositary. Deutsche Bank Luxembourg SA is the Luxembourg tender agent.
Based in Minneapolis, ResCap is a real estate finance company.
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