Discovery prices oversubscribed tender offer for 5.05%, 5.625% notes

By Marisa Wong

Morgantown, W.Va., March 14 – Discovery Communications, Inc. announced pricing under the cash tender offer for up to $600 million principal amount of wholly owned subsidiary Discovery Communications LLC’s $1.3 billion 5.05% senior notes due 2020 and $500 million 5.625% senior notes due 2019.

The total consideration for each $1,000 principal amount of notes is $1,082.84 for the 5.05% notes and $1,085.78 for the 5.625% notes.

Pricing was set at 11 a.m. ET on March 14 using a reference security plus a fixed spread. The reference security was the 1.375% U.S. Treasury note due Feb. 15, 2020 for the 5.05% notes and the 1.125% U.S. Treasury note due Feb. 28, 2019 for the 5.625% notes. The fixed spread was 70 basis points for the 5.05% notes and 60 bps for the 5.625% notes.

The total consideration includes an early tender premium of $30.00 for each $1,000 principal amount of notes tendered by the early tender deadline.

As announced earlier on Tuesday, investors had tendered $740.88 million principal amount of the two series of notes as of 5 p.m. ET on March 13, the early tender date.

Specifically, investors had tendered $511,087,000 of the 5.05% notes and $229,793,000 of the 5.625% notes, listed in order of priority acceptance levels.

Discovery accepted for purchase all of the tendered 5.05% notes and $88,913,000 of the 5.625% notes, according to the earlier company update on Tuesday.

The tender offer was scheduled to continue until 11:59 p.m. ET on March 27, but the offer was oversubscribed as of the early deadline.

Tendered notes may no longer be withdrawn, as of the early deadline.

Holders also will receive accrued interest up to but excluding the settlement date of March 15.

The tender was contingent on the company securing at least $650 million of proceeds from the issue of senior notes in a registered public offering, which was satisfied on March 13, the release noted.

As reported, Discovery priced $650 million of senior notes in two parts on Feb. 28, with $450 million of 3.8% notes due 2024 at 99.811 to yield 3.831% and $200 million in a reopening of 4.9% notes due March 11, 2026 at 105.038 to yield 4.206%.

Credit Suisse Securities (USA) LLC (212 325-2476 or 800 820-1653), J.P. Morgan Securities LLC (212 834-3424 or 866 834-4666) and RBC Capital Markets, LLC (212 618-7822 or 877 381-2099) are the dealer managers. The information agent and tender agent is D.F. King & Co., Inc. (877 871-1741 or 212 269-5550).

The global media company is based in Silver Spring, Md.

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