By Marisa Wong
Morgantown, W.Va., Oct. 15 – Hewlett-Packard Co. announced pricing for its any and all cash tender offer.
Pricing was determined at 2 p.m. ET on Thursday using a reference security and fixed spread for each series, as listed below.
Earlier in the day, the company gave an update on the cash tender offers to purchase up to $8.85 billion of its outstanding debt securities and announced pricing for the waterfall portion.
The waterfall tender offer was oversubscribed as of 5 p.m. ET on Oct. 14, the early tender date, according to an earlier company press release.
As a result, the company will purchase all of the first two series of notes in the waterfall offer that were tendered by the early deadline and part of the third note series using a proration factor of 84%, as laid out below.
In the waterfall offer, the company will return all of the tendered notes with a priority level of four to eight.
As previously announced, the tender offers consist of a tender offer for any and all of seven series of notes and a waterfall tender offer for up to $2.3 billion of notes.
The any and all offer covers $6.55 billion of seven note series and the waterfall offer covers $8.8 billion of eight note series.
In the any and all offer, investors had tendered the following amount of notes by the early tender deadline:
• $340,549,000, or 52.39%, of the 2.2% notes due December 2015;
• $653,557,000, or 65.36%, of the 2.65% notes due June 2016;
• $868,394,000, or 66.8%, of the 3% notes due September 2016;
• $627,772,000, or 73.86%, of the 3.3% notes due December 2016;
• $337,265,000, or 67.45%, of the 5.4% notes due March 2017;
• $1,062,730,000, or 70.85%, of the 2.6% notes due September 2017; and
• $458,905,000, or 61.19%, of the 5.5% notes due March 2018.
In the waterfall offer, holders had tendered the following amounts of notes, listed in order of priority acceptance level, and the company accepted the notes for purchase on a prorated basis:
• $950,206,000, or 76.02%, of the 2.75% notes due January 2019 using proration factor of 100%;
• $648,367,000, or 86.45%, of the floaters due January 2019 using proration factor of 100%;
• $836,013,000, or 61.93%, of the 3.75% notes due December 2020 using proration factor of 84%;
• $818,393,000, or 65.47%, of the 4.3% notes due June 2021 using proration factor of 0%;
• $646,041,000, or 64.6%, of the 4.375% notes due September 2021 using proration factor of 0%;
• $885,588,000, or 59.04%, of the 4.65% notes due December 2021 using proration factor of 0%;
• $214,458,000, or 42.89%, of the 4.05% notes due September 2022 using proration factor of 0%; and
• $781,272,000, or 65.11%, of the 6% notes due September 2041 using proration factor of 0%.
The any and all offer will continue until 11:59 p.m. ET on Oct. 28. The waterfall offer also had been set to end on Oct. 28. The offers began on Sept. 30.
Pricing details
Under the waterfall offer, the purchase price for the $750 million of floaters due January 2019 is $980 per $1,000 of notes.
The company also announced pricing for the remainder of the waterfall portion, which was determined at 11 a.m. ET on Oct. 15.
Pricing was set using a reference security and fixed spread for each series, as set below.
The total purchase price for each $1,000 principal amount was set at $1,033.38 for the 2.75% notes, $1,010.00 for the floaters due January 2019 and $1,067.11 for the 3.75% notes.
Under the any and all offer, the total consideration per $1,000 principal amount ranges from $1,002.48 to $1,104.35.
The total purchase price under both offers includes an early tender premium of $30 per $1,000 principal amount of notes tendered by the early tender deadline.
Holders who tender their notes after the early tender date will receive the purchase price, or the total amount less the early premium.
Other details
For the waterfall offer, all notes tendered before the early deadline having a higher priority level were to be accepted for purchase before any notes tendered with a lower priority level, and all notes tendered after the early deadline with a higher priority level were to be accepted before any notes tendered after the early deadline with a lower priority level. Notes tendered by the early deadline were to be accepted for purchase before other notes tendered after the early deadline even if those notes tendered after the early deadline were to have a higher priority level than those tendered before the early deadline.
If purchasing all of the tendered notes of a series on a settlement date would have caused the waterfall offer cap to be exceeded, that series was to be prorated.
Settlement is expected to occur on Oct. 16 for notes tendered by the early deadline and on Oct. 29 for those tendered after the early deadline.
The tender offers are conditioned on the completion of a financing transaction. Prior to the initial settlement date, Hewlett Packard Enterprise Co., a wholly owned subsidiary of HP Co. that will be separated from HP, intends to offer debt securities through a private placement. Some of the proceeds will be used to finance the purchase of notes tendered under the tender offers.
As previously reported, Hewlett-Packard Enterprise Co. priced a $14.6 billion nine-part issue of senior notes on Sept. 30.
However, the tender offers are not cross-conditioned on each other.
Goldman Sachs & Co. (800 828-3182 or 212 357-0422), Morgan Stanley & Co. LLC (800 624-1808 or 212 761-1057) and HSBC Securities (USA) Inc. (888 HSBC-4LM or 212 525-5552) are the dealer managers. Global Bondholder Services Corp. (banks and brokers 212 430-3774, all others 866 924-2200) is the tender and information agent.
The information technology company is based in Palo Alto, Calif.
Any and all offer pricing
| Notes | Reference security | Fixed spread | Total consideration
|
| $650 million 2.2% notes due December 2015 | 0.25% Treasury due Nov. 30, 2015 | 12 bps | $1,002.48
|
| $1 billion 2.65% notes due June 2016 | 0.375% Treasury due May 31, 2016 | 15 bps | $1,014.11
|
| $1.3 billion 3% notes due September 2016 | 0.875% Treasury due Sept. 15, 2016 | 35 bps | $1,021.12
|
| $850 million 3.3% notes due December 2016 | 0.5% Treasury due Nov. 30, 2016 | 37.5 bps | $1,029.03
|
| $500 million 5.4% notes due March 2017 | 0.5% Treasury due Feb. 28, 2017 | 15 bps | $1,065.57
|
| $1.5 billion 2.6% notes due September 2017 | 1% Treasury due Sept. 15, 2017 | 30 bps | $1,032.39
|
| $750 million 5.5% notes due March 2018 | 0.75% Treasury due Feb. 28, 2018 | 30 bps | $1,104.35
|
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|
| Waterfall offer pricing
|
| Notes, listed in order of priority | Reference security | Fixed spread | Total consideration
|
| $1.25 billion 2.75% notes due January 2019 | 1% Treasury due Sept. 15, 2018 | 80 bps | $1,033.38
|
| $750 million floaters due January 2019 | - | - | $980
|
| $1.35 billion 3.75% notes due December 2020 | 1.375% Treasury due Aug. 31, 2020 | 105 bps | $1,067.11
|
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