CVS Caremark holders tender $1.74 billion of notes by offers' end

By Susanna Moon

Chicago, Dec. 24 - CVS Caremark Corp. said that holders tendered $1,740,787,000 of notes in the offers that ended expired at 11:59 p.m. ET on Dec. 21.

The company received and accepted tenders for $605,742,000 of its $1 billion 6.6% senior notes due 2019 and $279.53 million of its $700 million 6.125% senior notes due 2016, according to a press release.

CVS Caremark also received tenders for $855,515,000 of its $1.75 billion 5.75% senior notes due 2017 and accepted tenders for $439,692,000, or 51.3%, of the notes.

As noted before, CVS Caremark tendered for any and all of its 6.6% notes and up to a maximum amount of its 6.125% notes and 5.75% notes. The notes are listed in order of acceptance priority level. The tender offers began on Nov. 26.

CVS Caremark accepted an amount of notes for purchase in the maximum tender offer so that the total principal amount of the notes tendered and accepted for purchase was up to $1,325,000,000 less the amount of the 6.6% notes tendered and accepted.

On Dec. 11, CVS Caremark purchased $602,958,000 of the 6.6% notes tendered by 5 p.m. ET on Dec. 7, the early tender date.

At the early tender deadline, investors had tendered $602,958,000 of the 6.6% notes, $278,619,000 of the 6.125% notes and $851,533,000 of the 5.75% notes.

The offer cap was amended to $1,325,000,000, up from $1 billion, of notes less the amount of 6.6% notes accepted for purchase, as noted on Dec. 10.

The total purchase price for each $1,000 principal amount of notes tendered by the early tender date included an early tender amount of $30.00 per $1,000 of notes.

Pricing per $1,000 of notes was set at 2 p.m. ET on Dec. 7 using the yield to maturity of the U.S. Treasury reference security plus a fixed spread as follows:

• For the 6.6% notes, the 1.625% U.S. Treasury notes due Nov. 15, 2022 minus 15 basis points for a total purchase price of $1,305.20;

• For the 6.125% notes, 0.75% U.S. Treasury notes due Oct. 31, 2017 plus 10 bps for a total price of $1,193.83; and

• For the 5.75% notes, 0.75% U.S. Treasury notes due Oct. 31, 2017 plus 25 bps for a total price of $1,211.88.

The reference yield was 1.628% for the 6.6% notes, 0.615% for the 6.125% notes and 0.615% for the 5.75% notes.

Those who tendered after the early tender date will receive the total purchase price less the early tender premium.

Holders also received accrued interest to but excluding the settlement date, which was Dec. 7 for 6.6% notes tendered by the early deadline and will be Dec. 26 for notes tendered after the early deadline.

"Through this transaction as well as our recent debt issuance, we are taking advantage of the current favorable interest rate environment," Dave Denton, executive vice president and chief financial officer, said in a previous press release.

"This debt refinancing will enhance our long-term debt structure and decrease our interest expense going forward."

The tender offers were conditioned on completing financing but not on any minimum principal amount of notes being tendered, a previous release noted.

CVS Caremark priced $1.25 billion of 2.75% 10-year senior notes on Nov. 26 to yield a spread of Treasuries plus 110 bps, as was reported by Prospect News.

Barclays (800 438-3242 or collect 212 528-7581) and U.S. Bancorp Investments, Inc. (877 558-2607 or collect 612 336-7604) were the dealer managers. D.F. King & Co., Inc. (800 949-2583 or for banks and brokers only 212 269-5550) was the tender and information agent.

The pharmacy retailer is based in Scarsdale, N.Y.

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