Tesco offers to purchase notes from six series for up to £500 million

By Marisa Wong

Los Angeles, Nov. 4 – Tesco Corporate Treasury Services plc announced tender offers for six series of notes.

The total amount payable, including accrued interest, for notes accepted under the offers is capped at £500 million, according to a notice on Friday.

The offers relate to the following series:

• £564.5 million outstanding (£433,820,199 amortized with 0.7685034526129 pool factor applied) 6.0517% secured bonds due Oct. 13, 2039 (ISIN: XS0347919028) issued by Tesco Property Finance 2 plc, with pricing to be based on the 0.25% U.K. Treasury Gilt due July 31, 2031 and a purchase spread of 270 basis points;

• £450.5 million outstanding (£431,741,284.52 amortized with 0.9583602320089 pool factor applied) 5.6611% secured bonds due Oct. 13, 2041 (ISIN: XS0735866583) issued by Tesco Property Finance 5 plc, with pricing to be based on the 4.5% U.K. Treasury Gilt due Sept. 7, 2034 and a purchase spread of 280 bps;

• £493.4 million outstanding (£451,120,458 amortized with 0.9143098054317 pool factor applied) 5.4111% secured bonds due July 13, 2044 (ISIN: XS0883200262) issued by Tesco Property Finance 6 plc, with pricing to be based on the 4.5% U.K. Treasury Gilt due Sept. 7, 2034 and a purchase spread of 280 bps;

• £430.65 million outstanding (£345,638,033.59 amortized with 0.8025961536979 pool factor applied) 7.6227% secured bonds due July 13, 2039 (ISIN: XS0425412227) issued by Tesco Property Finance 1 plc, with pricing to be based on the 1% U.K. Treasury Gilt due Jan. 31, 2032 and a purchase spread of 285 bps;

• £958.45 million outstanding (£882,537,435 amortized with 0.9207965308571 pool factor applied) 5.744% secured bonds due April 13, 2040 (ISIN: XS0512401976) issued by Tesco Property Finance 3 plc, with pricing to be based on the 0.875% U.K. Treasury Gilt due July 31, 2033 and a purchase spread of 290 bps; and

• £685.1 million outstanding (£640,186,672 amortized with 0.9344426682236 pool factor applied) 5.8006% secured bonds due Oct. 13, 2040 (ISIN: XS0588909878) issued by Tesco Property Finance 4 plc, with pricing to be based on the 0.875% U.K. Treasury Gilt due July 31, 2033 and a fixed spread of 290 bps.

The first three series listed above have priority acceptance level 1, and the remaining three series have priority acceptance level 2.

The offeror does not intend to accept any tenders of notes with priority level 2 unless it has accepted all tenders of notes with priority level 1 in full with no pro rata scaling.

The offeror said it reserves the right to accept significantly more or significantly less (or none) of any series as compared to any other series with the same priority level.

If the offer cap is exceeded, tendered notes may be subject to proration.

The company will pay accrued interest.

The offer expires at 11 a.m. ET on Nov. 11.

Pricing will be determined at 9 a.m. ET on Nov. 14. Tender results and pricing will be announced that day.

Settlement is expected to be on Nov. 16.

Barclays Bank plc (+44 20 3134 8515; attn.: liability management group; eu.lm@barclays.com), Goldman Sachs International (+44 20 7552 6157; attn.: liability management group; liabilitymanagement.eu@gs.com) and SMBC Nikko Capital Markets Ltd. (+44 20 3527 7545; attn.: liability management; LM.EMEA@smbcnikko-cm.com) are dealer managers for the offer.

Kroll Issuer Services Ltd. (+44 20 7704 0880; attn.: Arlind Bytyqi; tesco@is.kroll.com) is tender agent.

The issuer said the offer is part of its goal of reducing costs by achieving net annual interest savings. The company said it does not intend to cancel any notes purchased under any offer.

The special purpose finance company is a subsidiary of Tesco plc, a Welwyn Garden City, England-based grocery and retail company.

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