By Angela McDaniels
Tacoma, Wash., Aug. 2 - Norfolk Southern Corp. began private exchange offers for six series of notes, according to a company news release.
The company is offering up to $600 million principal amount of new notes due 2023 and cash to eligible holders of its $294,817,000 of 7.05% notes due 2037, $472,701,000 of 7.25% notes due 2031, $440 million of 7.8% notes due 2027, $350 million of 5.64% notes due 2029, $366.62 million of 5.59% notes due 2025 and $83,372,000 of 9% notes due 2021.
The interest rate of the new notes will equal the yield that corresponds to the bid-side price of the 1.75% Treasury due May 15, 2022 plus 115 basis points at 11 a.m. ET on Aug. 15.
The exchange offers will expire at 11:59 p.m. ET on Aug. 29. The early exchange date is 5 p.m. ET on Aug. 15.
The notes are listed in order of acceptance priority level. In addition, all notes tendered for exchange by the early exchange date will have priority over notes tendered after that time.
The total exchange considerations will be calculated by reference to the bid-side yield of a reference Treasury security at 11 a.m. ET on Aug. 15 plus a fixed spread and will include an early exchange premium of $30 for every $1,000 principal amount of notes tendered by the early exchange date.
The reference Treasury is the 1.75% Treasury due May 15, 2022 for the 5.59% notes and 9% notes and the 3% Treasury due May 15, 2042 for the remaining notes.
The fixed spread, the composition of the total exchange consideration and hypothetical total exchange considerations for each series of notes are noted in the table below.
The company will also pay accrued interest up to but excluding the applicable settlement date.
The settlement date is expected to be Aug. 20 for notes tendered by the early exchange date and accepted by the company and Aug. 30 for notes tendered and accepted after the early exchange date.
The cash payable to each noteholder will be adjusted as applicable by the accrued interest on the existing notes and the new notes up to but excluding the applicable settlement date.
The exchange offers are subject to the issuance of at least $250 million principal amount of new notes, which will not have been registered under the Securities Act of 1933.
The exchange offers are only being made to holders who can certify their status as a "qualified institutional buyer" as defined in Rule 144A under the Securities Act or who is a person other than a "U.S. person" as defined in Rule 902 under the Securities Act.
The information agent is D.F. King & Co., Inc. (800 848-3416, 212 269-5550 or www.dfking.com/norfolksouthern).
Norfolk Southern is a transportation company based in Norfolk, Va.
Norfolk Southern exchange offers
| Notes | Acceptance Priority Level | Fixed spread | Composition of total consideration | Hypothetical total exchange consideration
|
| New notes | Cash
|
| 7.05% notes due 2037 | 1 | 120 bps | 90% | 10% | $1,530.97
|
| 7.25% notes due 2031 | 2 | 80 bps | 87% | 13% | $1,536.42
|
| 7.8% notes due 2027 | 3 | 60 bps | 81% | 19% | $1,546.61
|
| 5.64% notes due 2029 | 4 | 70 bps | 77% | 23% | $1,308.50
|
| 5.59% notes due 2025 | 5 | 130 bps | 87% | 13% | $1,301.09
|
| 9% notes due 2021 | 6 | 85 bps | 67% | 33% | $1,514.39
|
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