Outlook 2023: Ukraine debt deferral leads overall smaller year in LM exercises

By Wendy Van Sickle

Columbus, Ohio, Dec. 30 – Outside of Ukraine, which hosted the liability management exercise affecting the single largest principal amount of securities in 2022, the year’s LM deals that topped $5 billion occurred in companies that operate largely in the oil and gas, telecommunications, media and biopharmaceutical circles, according to data from Prospect News.

The year in liability management seemed to generally lag the one before, with year-to-date figures down in terms of dollars and total deals at months’ ends consistently throughout 2022.

Freeze in Ukraine

In July, Ukraine began a solicitation of consents from holders of its 13 global notes, seeking to push out the maturity dates and defer interest payments for two years, as the county dealt with its invasion by Russian forces. The requisite majority of bondholders delivered their consents by the Aug. 10 deadline. As a result, Ukraine said it would save about $6 billion in payments on the notes over the two years.

Consent solicitations were also launched in July for the $700 million 6¼% guaranteed amortizing notes due 2028 issued by the State Road Agency of Ukraine (Ukravtodor) and the $825 million 6 7/8% sustainability-linked green notes due 2026 issued PJSC National Power Co. (Ukrenergo). Each of these notes is guaranteed by Ukraine, and each consent bid also sought to delay the maturity date and interest payments by two years.

Both of these solicitations were also successful.

AT&T calls over $8 billion

In May, Dallas-based telecommunications company AT&T announced a tender offer for up to a purchase price of $5 billion of 54 series of notes and up to a $3 billion price tag for nine series.

The 54 series included “higher coupon” notes and had rates ranging from 4.1% to 8.75%. These offers were priced at purchase prices ranging from 101.582 up to 130.751. A total principal amount of $4,788,384,000 of notes was accepted and purchased under this offer.

The nine series in the discount offer had lower coupons ranging from 1.65% to 3.85%. Purchase prices for these notes were set at a range from 77.006 to 93.31. A total principal amount of $3,966,253,000 of notes was accepted and purchased under this offer.

Occidental offers

Occidental Petroleum Corp. announced a couple sizable tender offers in 2022, including an offer for a price tag of up to $2.5 billion for notes from two pools made in February and a five-day offer for an up to $2 billion purchase amount for notes from three pools made in May.

For the earlier offer, the company ended up increasing the maximum purchase price to $2.82 billion, including $1,527,015,840 for notes with maturities from 2023 to 2029 and coupons from 2.7% to 3.45% and $1,289,817,270 for notes with maturities from 2039 to 2049 and coupons from 4.1% to 4 5/8%.

For the five-day offer made in May, the company almost doubled the offer to a $3,765,000,000 purchase price. The company paid $725 million for notes with maturities in 2023 through 2025; $790 million for notes with maturities in 2027 and 2029; and $2.25 billion for notes due 2036 through 2049.

Rogers consent bid

In another move designed to push out payments, Rogers Communications Inc. launched individual consent solicitations in August for eight series of notes totaling about $7.05 billion, including five dollar notes and three Canadian dollar notes.

The consent solicitations were in preparation for the proposed acquisition of Shaw Communications Inc. and sought to push the outside date for a mandatory redemption at 101 to Dec. 31, 2023 from Dec. 31, 2022.

The consent solicitations needed noteholders representing a majority of the notes in each series to consent. For each series, the company offered an initial consent fee and additional consent fees that will be paid to consenting holders only if, as of Dec. 31, 2022 the acquisition of Shaw has not yet been consummated and Rogers has not become obligated under the special mandatory redemption provision to redeem the notes for the series.

Each of the solicitations passed and the company paid a total initial consent fee of about C$520 million in September.

AIG tenders

Seeing March off more like a lion than a lamb, New York-based insurance provider American International Group, Inc. announced 23 separate cash tender offers for up to $6 billion total consideration on March 31.

All of the notes were issued by AIG, save one that was issued by Validus Holdings, Ltd. There was an acceptance priority order for the securities, which were denominated in dollars, pounds sterling and euros, and the company said it would not prorate any series.

By the offer’s expiry in April, the company had received tenders of $10,947,117,379.60 equivalent principal amount of the notes plus $76,357,000 of notes tendered under guaranteed delivery procedures. Based on the exchange rates for the sterling and euro notes, AIG announced it would accept a total of $6,796,900,885 combined principal amount of notes, excluding notes tendered via guaranteed delivery procedures.

GE tenders, too

In November, GE announced, including as successor of General Electric Capital Corp. and General Electric Capital Services, Inc., on behalf of subsidiaries GE Capital International Funding Co. Unlimited Co. (formerly GE Capital International Funding Co.), GE Capital European Funding Unlimited Co. (formerly GE Capital European Funding), GE Capital UK Funding Unlimited Co. (formerly GE Capital UK Funding), GE Capital Funding, LLC and Security Capital Group Inc., an offer to purchase securities from 38 series for up to a $7 billion total cash purchase price.

GE said the purpose of the offer was to purchase some outstanding debt and to reduce its leverage.

With the offer well oversubscribed at the early deadline with tender instructions for $9.3 billion, £629 million and €865 million of securities, the company announced on Nov. 30 that it would purchase only all of the tenders from the top two acceptance priorities, less than half of the tenders from the third acceptance priority and none of the tenders of notes from the 35 remaining series.

The acceptance amounts included all $5,833,124,000 tendered of the $6,962,918,000 outstanding 4.418% notes due Nov. 15, 2035 issued by GE Capital International for 93.581; all $1,128,397,000 tenders of the $2,452,263,000 outstanding 6.75% notes due March 15, 2032 issued by General Electric Capital Corp. for 113.253; and $272,537,000 of the $607,357,000 total tenders of the $750 million outstanding 4.55% notes due May 15, 2032 issued by GE Capital Funding for 96.633.

In total, the Boston-based conglomerate expected to repurchase about $7.2 billion principal amount of bonds under the offer.

Bristol-Myers lifts caps

In another offering covering many series, Bristol-Myers Squibb Co. announced an offer to buy notes from 22 series for up to an aggregate purchase price of $4 billion on Feb. 15. The notes covered by the offer were all issued by Bristol-Myers Squibb or wholly owned subsidiary Celgene Corp.

The offer was made in five pools, each with its own sub-cap, with two containing just one series of notes. The sub-caps ranged from $500 million to $1.25 billion.

After the early deadline passed in March, the New York-based biopharmaceutical company announced it would increase the sub-cap for each of the series, bringing the total purchase amount tup to about $5.08 billion, according to data from Prospect News.

Verizon raises maximum

Two days after Bristol-Myers Squibb’s offer, Verizon Communications Inc. announced it was kicking off offers to purchase 30 debt securities for up to $4 billion. The series with the top acceptance priority, the $4,499,992,000 outstanding 2.987% notes due 2056, had a $1 billion sub-cap. The remaining series had no sub-cap, and the offers were made under a waterfall structure.

Verizon later announced it was raising the offer cap to the total amount of cash needed to purchase all roughly $5.5 billion notes tendered by the early deadline on March 4.

The debt securities covered under the New York-based telecommunications company’s offer had maturities ranging from 2032 to 2056 and coupons from 2.987% to 8.95%.

LM medley

Other issuers that held sizable LM exercises in 2022 included Leuven, Belgium-based beer brewer Anheuser-Busch InBev SA/NV, which tendered for up to $3.5 billion of notes in November but indicated it would likely lift that cap if the early tenders exceeded it, which they did by more than 100%; Brazilian energy company Petroleo Brasileiro SA, which repurchased $2.03 billion principal amount of notes under a tender that ended in April and made a $790.9 million purchase payment for another tender offer that ended in July; and Marlborough, Mass.-based medical device maker Boston Scientific Corp., which repurchased $2,852,561,000 principal amount of notes under an offer that ended in March.

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