UK Power Networks prices, wraps Dutch auction tender offers for notes

By Susanna Moon

Chicago, Sept. 17 – UK Power Networks Holdings Ltd. said it tallied the results of the separate tender offers for four series of notes under a modified Dutch auction procedure. Pricing also was set Wednesday.

The company will spend £188,789,543.58 to purchase the tendered notes with the final acceptance amount at £150,001,000, according to a company press release.

Investors had tendered the following amounts by the end of the offers at 11 a.m. ET on Sept. 16:

• £185,806,000 of London Power Networks plc’s £300 million 5.375% senior notes due November 2016 under non-competitive tender instructions and £21,007,000 under competitive tender instructions;

• £127,891,000 of London Power Networks’ £250 million 5.125% notes due 2023 under non-competitive tender instructions and £34.78 million under competitive tender instructions;

• £67,721,000 of Eastern Power Networks plc’s £200 million 8.5% notes due 2025 under non-competitive tender instructions and £61,047,000 under competitive tender instructions; and

• £69,816,000 of South Eastern Power Networks plc’s £300 million 5.5% notes due 2026 under non-competitive tender instructions and £61,014,000 under competitive tender instructions.

The company will purchase the following amounts, accepting some non-competitive tenders on a pro rata basis:

• £52,277,000 of the 5.375% notes, with a pro rata scaling at a factor of 28.45%;

• None of the 5.125% notes;

• £67,721,000 of the 8.5% notes; and

• £30,003,000 of the 5.5% notes, with a pro rata scaling factor of 43%.

The maximum purchase spread was set at 50 basis points for the 5.375% notes, 100 bps for the 8.5% notes and 110 bps for the 5.5% notes.

Pricing details

The purchase price is 108.456 for the 5.375% notes, 142.998 for the 8.5% notes and 117.496 for the 5.5% notes, according to a separate press release Wednesday.

The purchase yield is 1.347509% for the 5.375% notes, 3.534695% for the 8.5% notes and 3.636472% for the 5.5% notes.

Pricing was set at 9 a.m. ET on Sept. 17 by modified Dutch auction using the yield of a benchmark security rate plus a spread as follows:

• The 4% U.K. Treasury stock due 2016 plus 50 bps for the 5.375% notes;

• The 5% U.K. Treasury stock due 2025 plus 100 bps for the 8.5% notes; and

• The 5% U.K. Treasury stock due 2025 plus 110 bps for the 5.5% notes.

After settlement on Sept. 19, there will be £247,723,000 of the 5.375% notes, £250 million of the 5.125% notes, £132,279,000 of the 8.5% notes and £269,997,000 of the 5.5% notes outstanding.

The company also will pay accrued interest.

The offers were announced Sept. 8.

HSBC Bank plc (+44 20 7992 6237, attn: liability management group, email liability.management@hsbcib.com) and RBC Europe Ltd. (+44 20 7029 7475, attn liability management group, or email liability.management@rbccm.com) were the dealer managers, and Lucid Issuer Services Ltd. (+44 20 7704 0880, attn: Paul Kamminga / David Shilson, or email ukpn@lucid-is.com) was the tender agent.

The company made the offers to reduce excess cash and expected to spend up to £185 million to purchase the notes with a sub-cap of £30 million for the 5.5% notes, according to a previous press release.

UK Power is an electricity provider based in London. It is owned by Hong Kong-based Cheung Kong Group.

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