Berkshire Hathaway Energy begins tender offer, seeks consents for five bond series

By Marisa Wong

Morgantown, W.Va., Dec. 13 – Berkshire Hathaway Energy and direct wholly owned subsidiary MidAmerican Funding, LLC have begun a cash tender offer for five series of outstanding bonds, according to a press release.

Berkshire Hathaway and MidAmerican are offering to purchase the following bonds, listed in order of acceptance priority, for an aggregate purchase price, including principal and premium but not including interest, of up to $1 billion:

• $325 million of outstanding 6.927% senior bonds due 2029 issued by MidAmerican;

• $475 million of outstanding 8.48% senior bonds due 2028 issued by Berkshire Hathaway;

• $1 billion of outstanding 6.5% senior bonds due 2037 issued by Berkshire Hathaway;

• $1.7 billion of outstanding 6.125% senior bonds due 2036 issued by Berkshire Hathaway; and

• $550 million of outstanding 5.95% senior bonds due 2037 issued by Berkshire Hathaway.

The amount of a series of bonds that is purchased in the tender offer will be based on the acceptance priority level for that series. If there are sufficient remaining funds from the maximum tender amount to purchase some, but not all, of the bonds tendered of any series, the amount of bonds purchased in that series will be subject to proration.

Concurrently, the offerors are soliciting consents from bondholders to some proposed amendments to the indentures governing each series of bonds. The proposed amendments would modify or eliminate substantially all of the restrictive covenants, some events of default and related provisions.

To be amended, each series of bonds requires consents from holders of a majority of the bonds from that series.

The offerors will execute a supplemental indenture once the needed consents are obtained. However, the proposed amendments will not become operative unless the issuer accepts the applicable bonds for purchase in the tender offer. In addition, in the event that the required consents for a series of bonds are delivered but the tendered bonds of that series are subject to proration, the amendments for those bonds will not become operative even if the bonds of that series are accepted in the tender offer.

The tender offer and consent solicitation both expire at 11:59 p.m. ET on Jan. 11.

Holders who tender their bonds by 5 p.m. ET on Dec. 27, the early tender date, will be eligible to receive the total consideration, which includes an early tender premium of $30.00 per $1,000 principal amount of bonds accepted for purchase.

Holders tendering after the early deadline but at or prior to the expiration date will only be eligible to receive the tender offer consideration, which is the total consideration less the early tender premium.

Holders who tender their bonds must consent to the proposed amendments.

The total consideration per $1,000 principal amount of bonds will be determined using a fixed spread specified for each series over the applicable yield based on the bid side price of the U.S. Treasury security specified for each series.

The reference security is the 2.25% Treasury due Nov. 15, 2027 for the 6.927% bonds due 2029 and 8.48% bonds due 2028 and the 2.75% Treasury due Aug. 15, 2047 for the other three series.

The fixed spread is 80 basis points for the 2029 and 2028 bonds, 85 bps for the 6.5% bonds due 2037, 75 bps for the 6.125% bonds due 2036 and 85 bps for the 5.95% bonds due 2037.

Pricing will be calculated at 2 p.m. ET on Dec. 28.

In addition to the total consideration or tender offer consideration, the companies will pay accrued interest up to, but not including, the applicable settlement date. Early tenders are expected to settle on Dec. 29, and any remaining tenders are expected to settle on Jan. 12.

Tenders and consents may be withdrawn or revoked at any time prior to 5 p.m. ET on Dec. 27.

Citigroup Global Markets Inc. (800 558-3745 or 212 723-6106) is the dealer manager and solicitation agent. Global Bondholder Services Corp. (866 470-3800 or 212 430-3774) is the information agent.

Based in Des Moines, Berkshire Hathaway Energy owns a portfolio of locally managed energy businesses.

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