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Schwab prices exchange offer, gets enough early tenders to proceed
By Susanna Moon
Chicago, Aug. 22 - Charles Schwab Corp. said it priced the private exchange offer for its $750 million of 4.95% senior notes due 2014 and set interest on the new notes to be issued in the offer at 3.225%.
For each $1,000 principal amount, holders will receive par amount of new notes due Sept. 1, 2022 and $75.18 in cash. Pricing was set at 11 a.m. ET on Aug. 22 using the bid-side yield on the 0.25% U.S. Treasury note due May 31, 2014 plus a fixed spread of 37.5 basis points. The reference yield was 0.649%.
The total purchase price also includes a $30.00 early premium for notes tendered for exchange by 5 p.m. ET on Aug. 21, the early tender date.
Schwab will also pay accrued interest.
Holders tendered about $256 million of the notes for exchange by the early deadline, which satisfied the first condition of the offer.
Completion of the offer required tenders for at least $250 million of the old notes by the early deadline. In addition, the yield on the 1.75% Treasury due May 15, 2022 may not be more than 3.8% or less than 1.25% at pricing.
Settlement for the early tendered notes is slated for Aug. 27.
The exchange offer will end at midnight ET on Aug. 28.
Holders may no longer withdraw tendered notes.
Those who tender their notes for exchange after the early deadline will not receive the early tender premium.
Schwab said on Aug. 15 that it extended the early participation date from 5 p.m. ET on Aug. 14. Pricing was extended from Aug. 15. The exchange offer began on Aug. 1.
The information agent is Global Bondholder Services Corp. (866 488-1500 or call collect 212 430-3774).
The offer is only open to holders who are qualified institutional buyers under Rule 144A or those outside the United States who are not U.S. persons under Regulation S.
The investment and financial services company is based in San Francisco.
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