Aon prices exchange offer for 8.205% debentures, updates early tenders

By Susanna Moon

Chicago, Dec. 6 - Aon plc said it priced the private offer to exchange up to $300 million of Aon Corp.'s $686,995,000 of outstanding 8.205% junior subordinated deferrable interest debentures due January 2027 for new senior notes due Dec. 12, 2042 and cash.

The total exchange price will be $1,346.20 per $1,000 principal amount, including an early exchange premium of $50.00 for notes tendered by 5 p.m. ET on Dec. 5, the early tender deadline.

Holders will receive $1,000 principal amount of new notes plus $353.08 in cash for each $1,000 principal amount of notes tendered by the early date.

The interest rate on the new notes will be 4.25%; the yield will be 4.291%; and the new notes' value will be $993.12, which was set at 2 p.m. ET on Dec. 6 using the bid-side yield of the 2.75% U.S. Treasury note due Aug. 15, 2042 plus 205 basis points. The reference yield was 2.741%.

After the early date, the payment will be $1,000 of new notes plus $303.08 in cash for each $1,000 of notes.

The company also will pay accrued interest to but excluding the settlement date.

As of the early tender date, holders had tendered about $165,946,000 principal amount of notes. As of 5 p.m. ET on Nov. 30, the previous early participation date, holders had tendered $164,582,000 principal amount of the old notes.

More offer details

Aon said on Dec. 3 that it waived the minimum issue condition for its private offer. Before that, the exchange offer required that a minimum of $250 million principal amount of new notes be issued in exchange for the old notes.

The company said in a previous press release that it instead planned to conduct a separate offering of additional debt securities with terms identical to those of the new notes in an amount of at least $250 million by the end of the first quarter of 2013.

The offer will end at midnight ET on Dec. 11, with settlement set for Dec. 12. The offer began Nov. 13. Pricing was pushed back from Dec. 3 and, before that, from Nov. 28. The early participation deadline was originally set for 5 p.m. ET on Nov. 27.

The debentures due 2027 are guaranteed by Aon plc, and the notes due 2042 will be issued by Aon plc and guaranteed by Aon Corp.

The offer is only open to qualified institutional buyers as defined in Rule 144A and non-U.S. persons under Regulation S.

D.F. King & Co. Inc. (800 967-4612 or 212 269-5550 for banks and brokers) is the information agent.

Chicago-based Aon and its subsidiaries are focused on risk and insurance brokerage services, consulting and insurance underwriting.

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