National Rural ups exchange cap in offer for 8% notes due 2032

By Jennifer Chiou

New York, Sept. 24 - National Rural Utilities Cooperative Finance Corp. announced the early participation results and an increase in the cap to its exchange offer for its 8% medium-term series C notes due 2032.

The company is offering a combination of new collateral trust bonds due Nov. 1, 2032 and cash.

As of 5 p.m. ET on Sept. 24, the early participation deadline, holders had tendered for exchange $491.8 million of the notes in the offer that was originally for up to $300 million principal amount of the 8% notes. The new tender cap is now $339,621,000.

As previously reported, the total exchange consideration - 74% to be paid in new bonds and 26% to be paid in cash - will be determined based on the yield to maturity of the 3% U.S. Treasury note due May 15, 2042 plus a spread determined using a modified Dutch auction procedure.

Each tendering holder must specify a bid spread in excess of the reference yield that the holder would be willing to accept as the basis for determining the total exchange consideration. Holders who tender their notes without specifying a bid spread will be deemed to have specified the maximum spread. The minimum bid spread is 112.5 basis points, and the maximum bid spread is 137.5 bps.

Holders who tendered their notes by the early participation date will be eligible to receive the total exchange consideration, which includes an early participation amount of $30.00 per $1,000 principal amount of old notes.

Holders who tender after the early participation date but on or prior to the expiration of the offer, midnight ET on Oct. 9, will be eligible to receive only the exchange consideration, namely the total consideration less the early participation amount.

The company will also pay accrued interest for the old notes.

Acceptance of tendered notes may be subject to proration.

As noted, the exchange offer is conditioned upon there being tendered an aggregate principal amount of old notes such that at least $250 million of new bonds will be issued.

The company previously said it is pursuing the exchange offer to improve its overall cost of funding.

A holder must be a qualified institutional buyer as defined in Rule 144A under the Securities Act or a non-U.S. person as defined in Rule 902 under the Securities Act to be eligible for the offer.

D.F. King & Co., Inc. (800 488-8075, collect for banks and brokers at 212 269-5550 or e-mail NRUCFC@dfking.com) is the information agent for the exchange offer.

National Rural is a market lender for electric cooperatives based in Dulles, Va. It launched the offer on Sept. 12.

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