Discover Bank offers cash, notes in swap for $500 million 8.7% notes

By Susanna Moon

Chicago, Oct. 19 - Discover Bank began a private offer to exchange up to $500 million of its $700 million outstanding 8.7% subordinated notes for cash and new senior notes due Nov. 21, 2022 issued by its parent company Discover Financial Services.

Holders who tender their notes by 5 p.m. ET on Nov. 1 will receive an early exchange premium of $50.00 per $1,000 principal amount.

The exchange offer will expire at 11:59 p.m. ET on Nov. 16. Tendered notes may be withdrawn by the early deadline.

The exchange offer is conditioned on a minimum issue of $250 million principal amount of new notes in exchange for the bank's 8.7% notes.

If the amount of tendered notes exceeds the offer cap, the bank will accept the notes for exchange on a pro rata basis, according to a company press release.

D.F. King & Co., Inc. (800 859-8509 or banks and brokerage firms 212 269-5550) is the information agent.

The exchange offer is only being made to qualified institutional buyers under Rule 144A and those who are not U.S. persons under Regulation S.

The bank is a subsidiary of Discover Financial, a Riverwoods, Ill.-based direct banking and payment services company.

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