Cox prices waterfall offers for five note series, gives early tenders

By Marisa Wong

Morgantown, W.Va., Aug. 10 – Cox Enterprises, Inc. subsidiary Cox Communications, Inc. announced pricing of the waterfall offers for five series of its notes. The company also announced earlier on Thursday the early tender results of those offers as of 5 p.m. ET on Aug. 9.

The company said on July 24 that it is tendering for eight note series in two parts – one for any and all of three series and the other capped for five others – until 11:59 p.m. ET on Aug. 18.

In the capped tenders, dubbed the waterfall offers, the maximum aggregate purchase price excluding interest is $1 billion, with a tender sub-cap of $650 million for priority 1 notes, $250 million for priority 2 notes and $100 million for priority 3 notes.

In the waterfall offers, the 8.375% notes have priority over the other series; the 6.95% notes due 2038 and the 6.45% notes have second priority; and the 6.95% notes due 2028 and the 6.8% notes have third priority.

Pricing was set at 11 a.m. ET on Aug. 10, extended from 11 a.m. ET on Aug. 7, and early settlement will occur on Aug. 11, extended from Aug. 8.

The early tender deadline was previously extended from 5 p.m. ET on Aug. 4.

Pricing, response

The early tenders for the waterfall offers are as follows, with pricing set using a fixed spread over the yield based on the bid-side price of a reference Treasury security;

• $441,187,000 of the $1.25 billion of 8.375% notes due 2039. The total consideration is $1,406.30 per $1,000 principal amount, using a fixed spread of 240 basis points and the 3% Treasury due Feb. 15, 2047;

• $70,637,000 of the $250 million of 6.95% notes due 2038. The total consideration is $1,197.27 per $1,000 principal amount, using a fixed spread of 255 bps and the 3% Treasury due Feb. 15, 2047;

• $78,074,000 of the $400 million of 6.45% notes due 2036. The total consideration is $1,155.87 per $1,000 principal amount, using a fixed spread of 235 bps and the 3% Treasury due Feb. 15, 2047;

• $17,788,000 of the $100 million of 6.95% notes due 2028. The total consideration is $1,233.01 per $1,000 principal amount, using a fixed spread of 195 bps and the 2.375% Treasury due May 15, 2027; and

• $8,388,000 of the $200 million of 6.8% notes due 2028. The total consideration is $1,229.57 per $1,000 principal amount, using a fixed spread of 195 bps and the 2.375% Treasury due May 15, 2027.

Cox had raised the price for two series by reducing the spread used in calculating the tender price. The spread was lowered from 255 bps for the 8.375% notes and from 250 bps for the 6.45% notes.

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

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

No waterfall offer is conditioned on any minimum amount of notes being tendered, the completion of any other waterfall offer or the completion of the any-and-all offers.

The company previously said that notes tendered by the early tender deadline will be accepted for purchase over those tendered afterward, even if they have a higher acceptance priority level.

Cox said it reserves the right to change the tender caps.

The tender offers are contingent on the company receiving at least $2.5 billion of net proceeds in a debt financing.

Any-and-all offers

In the any-and-all offers, the company is offering to purchase its $100 million 6.85% notes due 2018, $750 million 6.25% notes due 2018 and $600 million 9.375% notes due 2019.

The company said on Aug. 7 that it had received early tenders for $419.83 million of notes in that set of offers.

Specifically, Cox received tenders for $35.56 million of its $100 million of outstanding 6.85% notes due 2018, $314.46 million of its $750 million of outstanding 6.25% notes due 2018 and $69,809,000 of its $600 million of outstanding 9.375% notes due 2019 as of 5 p.m. ET on Aug. 4, with settlement on Aug. 8.

Pricing for the 6.85% notes is $1,023.88 per $1,000 principal amount, for the 6.25% notes is $1,037.49 per $1,000 principal amount and for the 9.375% notes is $1,102.72 per $1,000 principal amount.

The levels were set at 11 a.m. ET on Aug. 7.

The any-and-all tender offer continues until 11:59 p.m. ET on Aug. 18, and final settlement will take place on Aug. 21.

Cox intends to redeem any notes remaining outstanding after the any-and-all tender using the notes’ make-whole call provision.

Pricing for the any-and-all offers was set by using a fixed spread over the yield based on the bid-side price of a reference Treasury security at 11 a.m. ET on Aug. 7.

The reference Treasury is the 0.875% Treasury due Jan. 15, 2018 for the 6.85% notes, the 1% Treasury due May 31, 2018 for the 6.25% notes and the 1.125% Treasury due Jan. 15, 2019 for the 9.375% notes.

The fixed spread is 20 bps for the 6.85% notes, 35 bps for the 6.25% notes and 75 bps for the 9.375% notes.

The total amounts include an early tender premium of $30.00 per $1,000 principal amount of notes tendered by the early tender deadline.

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

The dealer managers are J.P. Morgan Securities LLC (866 834-4666 or 212 834-3424), RBC Capital Markets, LLC (877 381-2099 or 212 618-7822) and Wells Fargo Securities, LLC (866 309-6316 or 704 410-4760).

The tender agent and information agent is D.F. King & Co., Inc. (866 620-2536 or 212 269-5550).

Cox is a broadband communications and entertainment company based in Atlanta.

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