Norfolk Southern offers notes due 2052 in exchange for eight series

By Susanna Moon

Chicago, July 31 – Norfolk Southern Corp. began exchange offers for cash and up to $600 million principal amount of the company's new notes due 2052.

Norfolk Southern will pay interest on the new notes at a rate equal to the yield on the bid-side price of the 3% U.S. Treasury note due Feb. 15, 2047 plus a fixed spread of 125 basis points, according to a company announcement.

The exchange value will be set using a reference security plus a fixed spread as follows, with the notes listed in order of priority acceptance levels:

• $273,317,000 7.9% notes due 2097 using the 3% Treasury note due Feb. 15, 2047 plus 175 bps; none of the premium over par will be paid in cash;

• $504,492,000 6% notes due 2111 using the 3% Treasury note due Feb. 15, 2047 plus 170 bps; none of the premium over par will be paid in cash;

• $550 million 6% notes due 2105 using the 3% Treasury note due Feb. 15, 2047 plus 170 bps; none of the premium over par will be paid in cash;

• $256,690,000 7.05% notes due 2037 using the 3% Treasury note due Feb. 15, 2047 plus 80 bps; 2% of the premium over par will be paid in cash;

• $316,316,000 7.25% notes due 2031 using the 2.375% Treasury note due May 15, 2027 plus 75 bps; 21% of the premium over par will be paid in cash;

• $368,199,000 7.8% notes due 2027 using the 2.375% Treasury note due May 15, 2027 plus 70 bps; 72% of the premium over par will be paid in cash;

• $500 million 4.8% notes due 2043 using the 3% Treasury note due Feb. 15, 2047 plus 85 bps; 40% of the premium over par will be paid in cash; tender sub-cap of $100 million; and

• $600 million 4.65% notes due 2046 using the 3% Treasury note due Feb. 15, 2047 plus 95 bps; 68% of the premium over par will be paid in cash; tender sub-cap of $50 million.

Pricing will be set at 11 a.m. ET on Aug. 14 using the bid-side yield of the reference U.S. Treasury security plus the fixed spread.

The total exchange value will include a $30.00 early tender premium for each $1,000 principal amount of notes tendered by the early deadline of 5 p.m. ET on Aug. 11.

Notes tendered for exchange before the early deadline will have priority over those tendered afterward.

The exchange will remain open until 11:59 p.m. ET on Aug. 25.

Holders also will receive accrued interest to but excluding the settlement date of Aug. 15 for early tendered notes and Aug. 28 for any remaining tenders.

Tenders may be withdrawn at any time before the early tender deadline.

The exchange is contingent on the issue of at least $300 million principal amount of new notes.

The company said it will not receive any cash proceeds from the exchange offers.

The offers are only made to holders who have certified in an eligibility letter including their status as qualified institutional buyers under Rule 144A or those who are not U.S. persons under Rule 902.

D.F. King & Co., Inc. (800 431-9645, 212 269-5550, nsc@dfking.com or dfking.com/norfolksouthern) is the information agent.

Norfolk Southern is a Norfolk, Va.-based freight railroad company.

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