National Grid tenders for five notes series; unit offers to buy capped amount of four others

By Susanna Moon

Chicago, Sept. 6 – National Grid Gas plc has begun a tender offer for any and all of five series of its notes, and National Grid Electricity Transmission plc is tendering for a capped amount of four others.

In the any-and-all offer, National Grid is tendering for the following notes, with pricing to be set using a reference security plus a fixed spread, according to an announcement:

• £278 million of outstanding £484 million 6.375% instruments due March 3, 2020 with pricing using 4.75% U.K. Treasury gilt due 2020 plus 5 basis points;

• £403,624,000 of outstanding £503,078,000 4.1875% guaranteed index-linked bonds due 2022 based on 2.5% index-linked U.K. Treasury stock due 2020 plus 115 bps;

• £217,395,000 of outstanding £503,078,000 7% guaranteed bonds due 2024 based on 2.75% U.K. Treasury gilt due 2024 plus 35 bps;

• £111,106,000 of outstanding £275 million 8.75% bonds due 2025 based on 5% U.K. Treasury gilt due 2025 plus 35 bps; and

• £457 million of outstanding £457 million 6% instruments due May 2038 based on 4.75% U.K. Treasury gilt due 2038 plus 40 bps.

In the capped offer, National Grid Electricity Transmission said it will accept an amount of the following notes up to £1 billion less the amount tendered in the any-and-all offer but reserves the right to accept significantly more or less than that amount.

• £323.92 million of outstanding £450 million 5.875% bonds due 2024 with pricing based on 2.75% U.K. Treasury gilt due 2024 plus 25 bps;

• £525 million of outstanding £525 million 4% instruments due June 8, 2027 based on 4.25% U.K. Treasury gilt due 2027 plus 35 bps;

• £263.17 million of outstanding £360 million 6.5% notes due 2028 based on 6% U.K. Treasury gilt due 2028 based on 35 bps; and

• £310,777,000 of outstanding £379 million 7.375% instruments due January 2031 based on 4.75% U.K. Treasury gilt due 2030 plus 40 bps.

Tender instructions must be received by 11 a.m. ET on Sept. 15, with settlement following on Sept. 22.

Pricing will be set a 7 a.m. ET on Sept. 16 and is intended to reflect a yield to maturity of the notes on the settlement date based on the purchase yield. Specifically, the purchase price for each series other than the 2022 notes will equal the value of all remaining payments of principal and interest on the notes up to and including the scheduled maturity date of the series, discounted to the settlement date at a discount rate equal to the relevant purchase yield minus accrued interest for that series.

For the 2022 notes, the purchase price will equal the ‘dirty price’ at which the real redemption yield on the 2022 notes to the original maturity date would be equal to the purchase yield, the release noted.

National Grid is expecting to dispose of a majority stake in its U.K. gas distribution business, which will result in the transfer of its U.K. gas distribution business to a newly created subsidiary and the expected subsequent sale of a 51% controlling interest in the subsidiary to a third-party acquirer. Afterward, National Grid will become a more focused gas transmission business, according to the release.

Holders also will receive accrued interest.

National Grid Gas Finance plc plans to issue new euro- and sterling-denominated notes, initially guaranteed by National Grid, under its £6 billion euro medium-term notes program.

Barclays Bank plc (+44 20 3134 8515 or eu.lm@barclays.com), BNP Paribas (+44 20 7595 8668 or liability.management@bnpparibas.com), HSBC Bank plc (+44 20 7992 6237 or liability.management@hsbcib.com), Merrill Lynch International (+44 20 7996 5420 or DG.LM_EMEA@baml.com) and Morgan Stanley & Co. International plc (+44 20 7677 5040 or liabilitymanagementeurope@morganstanley.com) are the dealer managers. Lucid Issuer Services Ltd. (+44 20 7704 0880, fax +44 20 3004 1590 or ngrid@lucid-is.com) is the tender agent.

National Grid is a London-based electricity and gas utility.

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