HCP increases tender cap for 2022, 2023 notes to $500 million

By Wendy Van Sickle

Columbus, Ohio, June 20 – HCP, Inc. increased to $500 million the total maximum tender amount in its offers to purchase for cash its $800 million outstanding 4.25% senior notes due 2023 and its $600 million outstanding 4% senior notes due 2022.

The company announced the increase on Thursday after announcing earlier in the day the tender offer for an initial maximum of $400 million of the notes.

HCP also increased the target allocation for each series to $250 million from $200 million initially.

If notes of any series are tendered in an amount in excess of the $250 million target allocation, HCP will accept for purchase any notes tendered in excess of the target allocation based on the acceptance priority levels.

The 2023 notes have acceptance priority over the 2022 notes.

In no event will HCP purchase notes in excess of the overall tender cap.

If any excess exists, all excess notes tendered by the early tender time having a higher acceptance priority level will be accepted before any excess notes tendered by the early tender time having a lower acceptance priority level are accepted. All excess notes tendered after the early tender time having a higher acceptance priority level will be accepted before any excess notes tendered after the early deadline having a lower acceptance priority level are accepted.

However, notes tendered at or prior to the early tender time will be accepted for purchase in priority to other notes tendered after the early deadline, even if those notes tendered after the early deadline have a higher acceptance priority level than the notes tendered at or prior to the early deadline and even if those notes tendered later are yet to satisfy their applicable target allocation and the notes tendered earlier have satisfied their applicable target allocation.

The offers will expire at midnight ET at the end of July 18.

Holders must tender their notes by midnight ET at the end of July 3, the early tender time, to be eligible to receive the applicable total consideration. The total consideration includes an early tender premium of $30 per $1,000 principal amount.

Holders tendering after the early tender time will only be eligible to receive an amount equal to the total consideration minus the early tender premium.

The total consideration for each series will be determined by reference to the applicable fixed spread plus the yield based on the bid-side price of the applicable U.S. Treasury reference security. The reference security is the 2% U.S. Treasury due May 31, 2024 for the 2023 notes and the 1.75% U.S. Treasury due June 15, 2022 for the 2022 notes. The fixed spread is 72 basis points for the 2023 notes and 57 bps for the 2022 notes.

Pricing will be determined at 10 a.m. ET on July 5.

Holders will also receive accrued interest up to but excluding the applicable settlement date.

HCP may choose to settle early tendered notes on an early settlement date, which would be July 8. Final settlement will be on July 22.

Tenders may be withdrawn at any time prior to midnight ET at the end of July 3.

HCP said it may increase or decrease the maximum tender amount without extending the withdrawal deadline.

The offers are subject to a financing condition but are not subject to minimum tender conditions.

Mizuho Securities USA LLC (212 205-7736 or 866 271-7403), Credit Suisse Securities (USA) LLC (212 538-2147 or 800 820-1653) and Scotia Capital (USA) Inc. (800 372-3930) are dealer managers for the tender offers.

Global Bondholder Services Corp. (866 470-4500 for bankers and brokers or 212 430-3774 for all others) is the tender and information agent.

Irvine, Calif.-based HCP is a real estate investment trust that invests primarily in real estate serving the health care industry.

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