Guardian Life ups exchange cap for 7.375% notes, extends early premium

By Marisa Wong

Morgantown, W.Va., Dec. 28 – Guardian Life Insurance Co. of America announced the early results of its private exchange offer for up to $200 million of its $400 million outstanding 7.375% surplus notes due 2039 and also increased the maximum exchange amount to $250 million, according to a Tuesday press release.

As of 5 p.m. on Dec. 22, the early exchange time, holders had tendered $166,543,000, or 41.6%, of the outstanding notes for exchange.

Because the amount tendered by the early exchange time was less than the offer cap, the company will accept all of the early tendered notes without proration.

Guardian also announced on Tuesday that it will now pay the total exchange consideration, which includes an early exchange payment of $30 per $1,000 principal amount of existing notes, to holders whose notes are tendered after the early deadline and accepted for purchase.

As announced on Dec. 11, the company is offering new 4.85% surplus notes due 2077 in exchange for the existing surplus notes.

Pricing was set at 11 a.m. ET on Dec. 22 based on the yield of the 2.75% U.S. Treasury due Aug. 15, 2047 plus a fixed spread of 115 basis points. The reference yield on the pricing date was 2.847%.

The total exchange consideration is $1,487.81 per $1,000 principal amount of existing 2039 notes. Originally, holders tendering after the early deadline were to receive the total exchange consideration less the early exchange payment, or $1,457.81 per $1,000 of existing notes.

The total exchange consideration will be paid as $1,372.16 principal amount of new 2077 surplus notes per $1,000 principal amount of existing 2039 notes tendered after the early deadline, taking into account the adjusted value of the new notes which is $1,061.92 plus accrued interest to the final settlement date.

Holders of notes accepted for exchange as of the early exchange time received a cash payment of interest accrued from the most recent interest payment date to but excluding the early settlement date of Dec. 27.

The offer will end at midnight ET on Jan. 9.

The new surplus notes will be a further issuance of, and will be in addition to, the $350 million 4.85% surplus notes due 2077 that Guardian issued for cash on Jan. 24, 2017.

Interest on the new surplus notes will accrue from July 24. Holders will not be entitled to interest accrued on the new surplus notes up to but excluding the applicable settlement date, although the first interest payment following each settlement date will include the interest accrued during such period. Interest payable on the new surplus notes up to but excluding the applicable settlement date will be included in the adjusted new surplus notes value.

Notes tendered by the early exchange time have priority over notes tendered after the early exchange time. Had the principal amount of notes tendered by the early exchange time exceeded the offer cap, then the company would not be accepting any notes tendered for exchange after the early exchange time.

The information and exchange agent is D.F. King & Co., Inc. (800 207-2872, 212 269-5550 or www.dfking.com/gli).

New York-based Guardian Life Insurance provides life insurance, disability income insurance, annuities and investments to dental and vision insurance and employee benefits.

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