By Angela McDaniels
Tacoma, Wash., Aug. 14 – Norfolk Southern Corp. set pricing in its exchange offers for eight series of its notes and announced the principal amount of notes it plans to accept for exchange, according to a company news release.
As previously reported, the company is offering cash and up to $750 million principal amount – increased from $600 million on Aug. 11 – of new notes due 2052 in the exchange offers. The interest rate for the new notes has been set at 4.05%.
The company received tenders for $1,447,919,000 principal amount of the existing notes by the early tender deadline, 5 p.m. ET on Aug. 11.
The company will accept $551,099,000 principal amount of the existing notes that were tendered by the early deadline.
The principal amount of each series of notes tendered as of the early deadline and the principal amount to be accepted for exchange are noted in the first table below.
Holders also will receive accrued interest up to but excluding the early settlement date, Aug. 15.
The company expects to deliver an aggregate principal amount of $749,994,000 of new notes and will pay an aggregate of $9,604,611.10 cash consideration, including accrued interest, for the existing notes accepted for exchange on the early settlement date.
Because the $750 million cap on the new notes has been reached, no additional existing notes will be accepted for exchange after the early exchange date.
The exchange offers began July 31. They are scheduled to end at 11:59 p.m. ET on Aug. 25.
The total exchange consideration for each series of notes is noted in the second table below. In each case, it includes an early tender premium of $30.00 per $1,000 principal amount of notes. The composition of each total exchange consideration is also listed.
Pricing for each series of notes was set at 11 a.m. ET on Aug. 14 using the bid-side yield of a reference U.S. Treasury security plus a fixed spread.
The reference Treasury is the 3% Treasury note due Feb. 15, 2047 for the 7.9% notes, both series of 6% notes and the 7.05% notes; the 2.375% Treasury note due May 15, 2027 for the 7.25% notes and the 7.8% notes; and the 3% Treasury note due Feb. 15, 2047 for the 4.8% notes and the 4.65% notes. The spreads are listed in the second table.
The 4.8% notes had a tender subcap of $100 million, and the 4.65% notes had a tender subcap of $50 million.
For the new notes, the interest rate was set to equal 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.
The exchange offers are contingent on at least $300 million principal amount of new notes being issued.
The offers are open to qualified institutional buyers under Rule 144A or those who are not U.S. persons.
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.
Exchange offers results
Notes Amount outstanding Amount tendered by early deadline Amount to be accepted
| 7.9% notes due 2097 | $273,317,000 | $48,065,000 | $48,065,000
|
| 6% notes due 2111 | $504,492,000 | $378,147,000 | $378,147,000
|
| 6% notes due 2105 | $550 million | $298,561,000 | $124,887,000, or 41.9%
|
| 7.05% notes due 2037 | $256.69 million | $88,811,000 | None
|
| 7.25% notes due 2031 | $316,316,000 | $54,106,000 | None
|
| 7.8% notes due 2027 | $368,199,000 | $43,698,000 | None
|
| 4.8% notes due 2043 | $500 million | $304,336,000 | None
|
| 4.65% notes due 2046 | $600 million | $232,195,000 | None
|
|
|
|
|
| Exchange offers pricing
|
| Notes | Fixed spread | Total exchange consideration | Principal amount of new notes | Cash
|
| 7.9% notes due 2097 | 175 bps | $1,715.79 | $1,715.79 | None
|
| 6% notes due 2111 | 170 bps | $1,328.12 | $1,328.12 | None
|
| 6% notes due 2105 | 170 bps | $1,326.52 | $1,326.52 | None
|
| 7.05% notes due 2037 | 80 bps | $1,483.93 | $1,474.93 | $9.00
|
| 7.25% notes due 2031 | 75 bps | $1,474.29 | $1,375.29 | $99.00
|
| 7.8% notes due 2027 | 70 bps | $1,412.24 | $1,116.24 | $296.00
|
| 4.8% notes due 2043 | 85 bps | $1,189.80 | $1,114.80 | $75.00
|
| 4.65% notes due 2046 | 95 bps | $1,154.90 | $1,049.90 | $105.00
|
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