Discover begins private exchange offers for 10.25% notes, 6.45% notes

By Angela McDaniels

Tacoma, Wash., April 9 - Discover Financial Services began private exchange offers for its $400 million of 10.25% senior notes due 2019 and $400 million of 6.45% senior notes due 2017, according to a company news release.

Holders who exchange will receive new senior notes due 2022 and cash. The exchange amounts were not disclosed.

The company is offering to exchange any and all of the 10.25% notes. The maximum amount of 6.45% notes it will exchange is equal to the lesser of (a) $50 million and (b) the difference between $250 million and the principal amount of new notes issued in exchange for 10.25% notes.

If holders tender enough 10.25% notes to result in the issuance of more than $250 million of new notes, no 6.45% notes will be accepted for exchange.

If the company accepts any 6.45% notes and if the amount of 6.45% notes tendered exceeds the cap, the tendered 6.45% notes will be accepted for exchange on a pro rata basis.

Holders who tender by 5 p.m. ET on April 20 will receive an early exchange premium equal to $50 per $1,000 principal amount of old notes.

The exchange offers will expire at 11:59 p.m. ET on May 4.

The exchange offers are subject to conditions that include the receipt of enough notes to result in the issuance of at least $250 million of new notes.

The offers are only being made to qualified noteholders.

The information agent is D.F. King & Co., Inc. (800 848-3416 or, for banks and brokerage firms, 212 269-5550).

Discover is a bank holding company based in Riverwoods, Ill., that offers direct banking and payment services

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