Altria tenders for $2.6 billion of notes, debentures and €1 billion bonds

By Jennifer Chiou

New York, Jan. 31 - Altria Group, Inc. announced that it is redeeming $2.6 billion of notes and debentures as well as about €1 billion of bonds in connection with its planned spinoff of Philip Morris International Inc., Altria and its subsidiary, Altria Finance (Cayman Islands) Ltd.

Altria and Altria Finance also are soliciting consents to amend the indentures to clarify the application of certain provisions to the spinoff. While Altria noted that it believes that the spinoff is not prohibited by the indentures, it wishes to eliminate any uncertainty by amending them.

Holders may either tender and deliver consents or deliver consents without tendering their securities.

Affected securities include the company's $350 million of 7.65% notes due 2008, $500 million of 5 5/8% notes due 2008, $1 billion of 7% notes due 2013, $750 million of 7¾% debentures due 2027 and €1.02 billion of 5 5/8% bonds due 2008.

The company said it will calculate its payout using the 5.125% Treasury due June 30, 2008 and a fixed spread of 15 basis points for the 7.65% notes; the 4 7/8% Treasury due Oct. 31, 2008 and 15 bps for the 5 5/8% notes; the 4¼% Treasury due Nov. 15, 2013 and 50 bps for the 7% notes; and the 4¾% Treasury due Feb. 15, 2037 and 75 bps for the 7¾% debentures and the 3¼% Bundesschatzanweisung due June 13, 2008.

The offers for the dollar-denominated notes expire at 5 p.m. ET on Feb. 29 while the expiration time for the euro-denominated notes is 11 a.m. ET on Feb. 29. The consent deadline is Feb. 13.

Altria said it will pay accrued interest to the payment date.

Goldman, Sachs & Co. (call collect 212 357-4692 or 800 828-3182) and Citi (800 558-3745) are the dealer managers for the dollar-denominated notes offers and solicitation agents. Global Bondholder Services Corp. is the information agent and depositary (call collect 212 430-3774 or 866 470-3700).

Goldman Sachs International (44 (0) 20 7774 4686) and Deutsche Bank AG, London Branch (44 (0) 20 7545 8011) are the dealer managers for the euro-denominated bonds offer. Deutsche Bank is the tender agent (44 (0) 20 7547 5000).

New York-based Altria, through its subsidiaries, manufactures and sells cigarettes and other tobacco products. As of Dec. 31, Altria owned 100% of Philip Morris International Inc., Philip Morris USA Inc., John Middleton, Inc. and Philip Morris Capital Corp.

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