Norfolk Southern offers notes due 2047 in exchange for seven series

By Susanna Moon

Chicago, Oct. 30 – Norfolk Southern Corp. began exchange offers for cash and up to $600 million principal amount of the company's new notes due 2047.

The exchange will remain open until 11:59 p.m. ET on Nov. 28.

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 May 15, 2047 plus a fixed spread of 110 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:

• $425,113,000 6% notes due 2105 using the 3% Treasury note due May 15, 2047 plus 165 bps; none of the premium over par will be paid in cash;

• $225,252,000 7.9% notes due 2097 using the 3% Treasury note due May 15, 2047 plus 175 bps; none of the premium over par will be paid in cash;

• $126,345,000 6% notes due 2111 using the 3% Treasury note due May 15, 2047 plus 175 bps; none of the premium over par will be paid in cash;

• $256.69 million 7.05% notes due 2037 using the 3% Treasury note due May 15, 2047 plus 75 bps; 4% of the premium over par will be paid in cash;

• $316,316,000 7.25% notes due 2031 using the 2.25% Treasury note due Aug. 15, 2027 plus 70 bps; 25% of the premium over par will be paid in cash;

• $368,199,000 7.8% notes due 2027 using the 2.25% Treasury note due Aug. 15, 2027 plus 65 bps; 78% of the premium over par will be paid in cash; and

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

Pricing will be set at 11 a.m. ET on Nov. 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 Nov. 13.

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

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

Tenders may be withdrawn at any time before the early tender deadline.

Settlement is expected to occur on Nov. 16.

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 are 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.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.