TECO Energy gets $294.2 million early tenders for 7½% notes, extends early deadline in exchange offers

By Jennifer Chiou

New York, Dec. 6 - TECO Energy, Inc. said it obtained tenders from holders of $294.2 million of its $300 million of 7½% notes due 2010 by the early deadline.

In addition, the company extended the early expiration in the exchange offers for its 7.2% notes due 2011, 7% notes due 2012 and 6¾% notes due 2015. The early deadline and final deadline in the par-for-par exchange offers will now be midnight ET on Dec. 19, prolonged from 5 p.m. ET on Dec. 5.

The tender offer for the 7½% notes will still expire at 5 p.m. ET on Dec. 19. The offers began on Nov. 20.

The payout for the 7½% notes is $1,088.23 per $1,000 principal amount and was determined at 2 p.m. ET on Dec. 6, based on the bid-side yield to maturity of the 3 5/8% U.S. Treasury note due June 15, 2010 plus 85 basis points.

The tender consideration includes an early tender premium of $20 for each $1,000 principal amount of notes tendered by the early participation deadline, which was 5 p.m. ET on Dec. 5.

Noteholders will also receive accrued interest up to but excluding the settlement date, which will be Dec. 7 for notes tendered by the early participation deadline and Dec. 21 for notes tendered after that.

The tender offer is conditioned on the completion of the sale of TECO Transport Corp., which is expected to close in early December. TECO Energy said it plans to fund the tender offer with a portion of the proceeds from the sale.

Exchange offers

TECO Energy announced the results to date in its offer to exchange its 7.2% notes and 7% notes for up to $300 million of new notes issued by TECO Finance Inc. The new notes will mature on Nov. 1, 2017, and the interest rate will be determined two days before the exchange offer expiration.

As of 5 p.m. ET on Dec. 6, TECO Energy said it obtained tenders to exchange $236.3 million of 7.2% notes and $155.1 million of 7% notes.

The company will accept all tenders for the 7.2% notes before it accepts any tenders for the 7% notes.

To consummate the offer, TECO Energy said it must receive enough tenders to result in the issuance of at least $200 million of new notes.

The company also announced current results of its par-for-par exchange offers for its 7.2% notes, 7% notes and 6¾% notes. Noteholders will receive a like amount of new notes with identical terms issued by TECO Finance.

As of 5 p.m. ET on Dec. 5, holders had tendered $169.8 million of 7.2% notes, $144.5 million of 7% notes and $191.2 million of 6¾% notes in the par-for-par exchange.

Noteholders who tender under the par-for-par exchange offers by the early participation deadline will also receive the $20 early tender premium.

Any TECO Finance notes issued in the exchange offers will be fully and unconditionally guaranteed by TECO Energy, according to the release.

Noteholders who participate in the exchange offer for new notes due 2017 whose notes are not accepted will automatically be included in the par-for-par exchange offers.

The tender and exchange offers are part of TECO Energy's debt management plan, under which it plans to retire up to $500 million of TECO Energy debt obligations through 2010 and to make additional investments in Tampa Electric Co.

TECO Energy believes that extending the maturity and resetting the coupon on up to $300 million of its notes will cause its overall capital structure to better reflect that these notes were incurred to support its non-regulated businesses.

Global Bondholder Services Corp. (866 857-2200 or 212 430-3774) is the information agent.

TECO Energy is a Tampa, Fla.-based company engaged in diversified energy-related operations.

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