Anglo American begins capped tender offers for eight series of notes

By Angela McDaniels

Tacoma, Wash., March 20 – Anglo American Capital plc began a non-U.S. tender offer for six series of its notes and a U.S. tender offer for two series of its notes, according to company news releases.

The company plans to issue dollar- and/or euro-denominated notes of benchmark size. The tender offers are subject to the successful completion of the new issue.

The company said the tender offers and the new issue are being made as part of its active capital management and are aimed at extending its debt maturity profile.

Securities purchased in the tender offers will be canceled.

Non-U.S. tender offer

In the non-U.S. tender offer, the company is offering to spend up to the equivalent of $1.25 billion to repurchase the following:

• €537,805,000 outstanding 1¾% notes due April 3, 2018;

• £266,743,000 outstanding 6 7/8% notes due May 1, 2018;

• €481,635,000 outstanding 2½% notes due Sept. 18, 2018;

• €750 million outstanding 2¾% notes due June 7, 2019;

• €600 million outstanding 1½% notes due April 1, 2020; and

• €600 million outstanding 2 7/8% notes due Nov. 20, 2020.

The $1.25 billion cap includes the payment of derivative costs but excludes the payment of accrued interest.

The company will determine the allocation of the aggregate nominal amount accepted for purchase among each series. If the cap is exceeded, notes will be accepted on a pro rata basis.

The tender offer will end at 11 a.m. ET on March 27.

The purchase price for each series will be determined at 8 a.m. ET on March 28 by reference to the relevant purchase yield.

For the 1¾% notes and the 2½% notes, the purchase yield will be fixed at negative 0.15% and zero, respectively. Assuming a settlement date of March 30, the purchase price would be 101.924% of par for the 1¾% notes and 103.678% of par for the 2½% notes.

For the remaining notes, the purchase yield will be the sum (to be annualized in the case of the 6 7/8% notes) of the relevant purchase spread and the relevant reference rate.

The reference rate is the 5% U.K. Treasury Gilt due March 7, 2018 for the 6 7/8% notes, the June 2019 interpolated mid-swap rate for the 2¾% notes, the three-year mid-swap rate for the 1½% notes and the November 2020 interpolated mid-swap rate for the 2 7/8% notes.

The purchase spread is 70 basis points for the 6 7/8% notes, 50 bps for the 2¾% notes, 70 bps for the 1½% notes and 85 bps for the 2 7/8% notes.

Holders will also receive accrued interest through the settlement date, which is expected to be March 30.

The company expects to announce the preliminary results on March 28 and final results as soon as practicable after the pricing time.

The non-U.S. tender offer is not open to holders located in the United States.

U.S. tender offer

In the U.S. tender offer, the company is offering to spend up to $250 million to repurchase its $850 million of 3.625% senior securities due May 14, 2020 and $500 million 4.45% senior securities due Sept. 27, 2020.

The $250 million cap excludes the payment of accrued interest.

The total purchase price for each series will be determined by reference to the sum of the purchase spread, 140 bps, and the yield of the 1.625% U.S. Treasury due March 15, 2020 at 10 a.m. ET on April 3.

Each total purchase will include an early tender premium of $30 per $1,000 principal amount of notes tendered by the early tender deadline, 5 p.m. ET on March 31.

The tender offer will end at 11:59 p.m. ET on April 17.

Holders will also receive accrued interest through the early settlement date or the final settlement date, as applicable. The early settlement date is expected to be April 5, and the final settlement date is expected to be April 19.

If the aggregate purchase prices of the tendered notes exceeds $250 million, a single proration factor will be applied across both series of notes.

If the cap is exceeded on the early settlement date, the company will not accept for purchase any notes tendered after the early tender deadline.

The company expects to announce the early participation results on April 3 and the final offer results on April 18.

For both offers, the global coordinators are Citigroup Global Markets Ltd. and Morgan Stanley & Co. International plc.

For the non-U.S. tender offer, the joint dealer managers are Banco Bilbao Vizcaya Argentaria SA (+44 20 7648 7516, +44 20 7397 6125 or liabilitymanagement@bbva.com), Banco Santander, SA (+44 20 7756 6909, +44 20 7756 6648, tommaso.grospietro@santandergcb.com or King.Cheung@santandergcb.com), Barclays Bank plc (+44 20 3134 8515 or eu.lm@barclays.com), Citigroup (+44 20 7986 8969 or liabilitymanagement.europe@citi.com) and Morgan Stanley (+44 20 7677 7799 or liabilitymanagement.europe@morganstanley.com).

For the non-U.S. tender offer, the tender agent is Lucid Issuer Services Ltd. (+44 20 7704 0880 or angloamerican@lucid-is.com).

For the U.S. tender offer, the joint dealer managers are Citigroup (800 558-3745, 212 723-6106, +44 20 7986 8969 or liabilitymanagement.europe@citi.com), Credit Suisse Securities (Europe) Ltd. (800 820-1653, 212 538-2147, +44 20 7888 8763, +44 20 7888 9350 or liability.management@credit-suisse.com), Goldman Sachs & Co. (800 828-3182, 212 357-1057, +44 20 7774 9862 or liabilitymanagement.eu@gs.com), Morgan Stanley (800 624-1808, 212 761-1057, +44 20 7677 5040 or liabilitymanagement.europe@morganstanley.com) and UBS Securities LLC (888 719-4210, 203 719-4210, +44 20 7568 2133 or ol-liabilitymanagement-eu@ubs.com).

For the U.S. tender offer, the information and tender agent is D.F. King & Co., Inc. (212 269-5550, 800 330-5897 or anglo@dfking.com).

Anglo American is a subsidiary of London-based mining company Anglo American plc.

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