Direct Line accepts tenders for £250 million of subordinated notes

By Angela McDaniels

Tacoma, Wash., Dec. 1 – Direct Line Insurance Group plc received tenders for £366,714,000 principal amount of its fixed-to-floating guaranteed subordinated notes due 2042 and accepted £250 million of those tendered notes for purchase, according to a company filing with the London Stock Exchange.

The scaling factor is 69.2691%.

The tender offer began Nov. 22 and ended at 11 a.m. ET on Nov. 30. Settlement is expected to take place Dec. 8.

The purchase price is 130.733% of par. Pricing was set by reference to the 4% U.K. Treasury note due March 2022 plus 125 basis points for a purchase yield of 1.909%.

The purchase price is intended to reflect a yield to the first call date of April 27, 2022 on the settlement date using the purchase yield.

Settlement of the tender offer is contingent on the satisfaction of the new financing condition. The company plans to issue sterling-denominated fixed-rate reset perpetual restricted tier 1 contingent convertible notes and use the proceeds to fund the tender offer.

Notes purchased in the tender offer will be canceled.

The company said the offer is being made to improve its capital structure and debt profile.

The dealer managers are Deutsche Bank AG, London Branch (+44 20 7545 8011), HSBC Bank plc (+44 20 7992 6237 or LM_EMEA@hsbc.com) and Royal Bank of Scotland plc (+44 20 7678 5405 or LiabilityManagement@natwestmarkets.com). The tender agent is Lucid Issuer Services Ltd. (+44 207 704 0880 or directline@lucid-is.com).

Direct Line is an insurance company based in Bromley, England.

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