British American Tobacco gives early results, ups maximum for each pool

By Mary-Katherine Stinson

Lexington, Ky., Aug. 14 – British American Tobacco announced the early results of its debt issuing entities’ $2.9 billion capped debt tender offer and announced an increase in the maximum aggregate purchase price payable, according to a press release.

The issuers are B.A.T Capital Corp., Reynolds American Inc. and B.A.T. International Finance plc.

The tender offer is being conducted with the notes divided into four pools, with each pool having a cap of a maximum aggregate purchase price payable, which has now been increased within each pool.

The early tender date and the withdrawal deadline was 5 p.m. ET on Aug. 11.

Pricing was to be determined at 10 a.m. ET on Aug. 14.

All of the notes below are listed in their pools in acceptance priority order.

Pool 1 early results

The first pool, covering three notes, was originally capped at $635 million. It has now been increased to allow the purchase of the entire tendered principal amount of B.A.T. International Finance’s 2024 notes and $635 million of tendered B.A.T. Capital 3.222% notes due 2024.

As of the early tender date, the following pool 1 notes were tendered:

• £271,118,000 of B.A.T. International Finance’s £500 million outstanding 7.25% guaranteed notes due 2024 (ISIN: XS0352062995) with pricing to be based on the 0.125% U.K. Treasury due Jan. 31, 2024 and a fixed spread of 45 basis points;

• $1,512,038,000 of B.A.T. Capital’s $2.5 billion outstanding 3.222% notes due 2024 (Cusip: 05526DAZ8) with pricing to be based on the 2.375% U.S. Treasury due Aug. 15, 2024 and a fixed spread of 25 bps; and

• $535,316,000 of B.A.T. Capital’s $1 billion outstanding 2.789% notes due 2024 (Cusip: 05526DBG9) with pricing to be based on the 3.25% U.S. Treasury due Aug. 31, 2024 and a fixed spread of 45 bps.

Pool 2 early results

The second pool, also covering three notes, was originally capped at $750 million. It has now been increased to allow the purchase of the entire tendered principal amount of B.A.T. International Finance’s 2025 notes, £150 million of tendered B.A.T. Capital 2025 notes and $468 million of tendered Reynolds 2025 notes.

As of the early tender date, the following pool 2 notes were tendered:

• $497,867,000 of B.A.T. International Finance’s $1.5 billion outstanding 3.95% notes due 2025 (Cusips: 05530QAK6, G08820CH6) with pricing to be based on the 4.75% U.S. Treasury due July 31, 2025 and a fixed spread of 60 bps and a subcap for the series of $700 million;

• £177,541,000 of B.A.T. Capital’s £450 million outstanding 2.125% guaranteed notes due 2025 (ISIN: XS1664647499) with pricing to be based on the 0.625% U.K. Treasury due June 7, 2025 and a fixed spread of 115 bps and a subcap for the series of £150 million; and

• $1,229,948,000 of Reynolds’ $2.5 billion outstanding 4.45% notes due 2025 (Cusip: 761713BG0) with pricing to be based on the 4.75% U.S. Treasury due July 31, 2025 and a fixed spread of 60 bps.

Pool 3 early results

The third pool covers two series, with an original maximum tender amount of $365 million. It has now been increased to allow the purchase of the entire tendered principal amount of B.A.T. International Finance’s 2026 notes.

As of the early tender date, the following pool 3 notes were tendered:

• £361,451,000 of B.A.T. International Finance’s £650 million outstanding 4% guaranteed notes due 2026 (ISIN: XS0969309847) with pricing to be based on the 1.5% U.K. Treasury due July 22, 2026 and a fixed spread of 130 bps; and

• $565.54 million of B.A.T. Capital’s $1 billion outstanding 3.215% notes due 2026 (Cusip: 05526DBJ3) with pricing to be based on the 4.5% U.S. Treasury due July 15, 2026 and a fixed spread of 65 bps.

Pool 4 early results

The fourth pool had a maximum tender amount of $1.15 billion, which has now been increased to allow the purchase of the entire $1,227,000,000 tendered principal amount of B.A.T. Capital’s 2027 notes and €155 million of tendered B.A.T. International Finance 2027 notes.

As of the early tender date, the following pool 4 notes were tendered:

• $1,667,184,000 of B.A.T. Capital’s $3.5 billion outstanding 3.557% notes due 2027 (Cusip: 05526DBB0) with pricing to be based on the 4.125% U.S. Treasury due July 31, 2028 and a fixed spread of 100 bps and a subcap for the series which has been upped to $1.227 billion from the previous $1.1 billion; and

• €189,446,000 of B.A.T. International Finance’s €800 million outstanding 1.25% guaranteed notes due 2027 (ISIN: XS1203859928) with pricing to be based on the 2027 International Finance notes interpolated mid-swap rate plus a fixed spread of 25 bps and a subcap for the series of €155 million.

Notes

All of the considerations will include, when priced, a €50, $50 or £50 early tender consideration that will only be paid to noteholders who tender by the early deadline.

Accrued interest will also be paid.

The offers are subject to a financing condition.

Tenders may be prorated.

Details

Early settlement is expected on Aug. 16.

The offers will expire at 5 p.m. ET on Aug. 28.

Final settlement will be Aug. 30.

Deutsche Bank Securities Inc. (866 627-0391), Deutsche Bank AG, London Branch (+44 20 7545 8011), Goldman Sachs & Co. LLC (+44 20 7774 4836, 800 828-3182) and Merrill Lynch International (+44 20 7996 5420, 888 292-0070, DG.LM-EMEA@bofa.com) are acting as dealer managers.

Global Bondholder Services Corp. is the information and tender agent (212 430-3774, 855 654-2015, contact@gbsc-usa.com).

British American Tobacco is a London-based international tobacco company.

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