Wm Morrison tenders for up to £200 million cash of three note series

By Susanna Moon

Chicago, May 31 – Wm Morrison Supermarkets plc is tendering for up to £200 million cash of its €700 million 2.25% notes due 2020, £400 million 4.625% notes due 2023 and £400 million 3.5% notes due 2026.

Of the £200 million the company plans to spend, there is a sub-cap of the euro equivalent of £100 million set aside for the purchase of the 2020 notes, according to a company announcement.

To participate, holders must tender their notes by 11 a.m. ET on June 7. Tender instructions will be irrevocable.

For the 2.25% notes, pricing will be set at 6 a.m. ET on June 8 using the 2020 notes interpolated mid-swap rate plus a spread of 90 basis points.

For the other two series, pricing will be set using a modified Dutch auction with a maximum purchase spread as follow:

• For the 4.625% notes, pricing will be based on the 2.25% U.K. Treasury gilt due September 2023 with a maximum purchase spread of 250 bps; and

• For the 3.5% notes, pricing will be based on the 2% U.K. Treasury gilt due September 2025 with a maximum purchase spread of 260 bps.

The company will also pay accrued interest.

Under the modified Dutch auction offers, the company will determine the aggregate nominal amounts of the 2023 notes and 2026 notes it will accept for purchase and the purchase spread it will use in the calculation of the purchase price for each series.

Tender instructions for the 2023 notes and 2026 notes may be submitted on a non-competitive or a competitive basis.

The minimum nominal amount is €100,000 for the 2020 notes or £100,000 for the 2023 notes or 2026 notes, and in integral multiples of €1,000 or £1,000 after that.

Settlement has been set for June 10.

BNP Paribas (+44 20 7595 8668 or liability.management@bnpparibas.com) and HSBC Bank plc (+44 20 7992 6237 or liability.management@hsbcib.com) are the dealer managers. Lucid Issuer Services Ltd. (+44 20 7704 0880, fax +44 20 3004 1590, Victor Parzyjagla, or morrisons@lucid-is.com) is the tender agent.

“The offers are being made in the context of the company’s ongoing focus on debt reduction,” the company said in the release. “The company intends to use its strong liquidity position to reduce the level of gross debt outstanding and the resulting interest expense.”

Wm Morrison is a Bradford, England-based supermarket group.

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