HSBC cancels tender offer for Swiss Re’s 6.854% step-up preferreds

By Angela McDaniels

Tacoma, Wash., March 31 – HSBC Bank plc terminated its tender offer for the $750 million outstanding liquidation preference of 6.854% perpetual subordinated step-up preferred securities issued by Swiss Re Capital I LP and guaranteed on a subordinated basis by Swiss Reinsurance Co. Ltd.

The offer was contingent on the results of a concurrent tender offer for a portion of ELM BV’s €1 billion of 5.252% perpetual step-up notes. HSBC has accepted for purchase €707.55 million principal amount of euro notes for a payable amount of €750,003,000.

The maximum amount of 6.854% preferreds to be accepted is equal to the dollar equivalent of the excess of €750 million over the amount payable for the euro notes accepted for purchase in the offer, excluding accrued interest. This amount is zero, so the offer was terminated.

For each $1,000 principal amount of 6.854% preferreds, the company planned to pay a total consideration of $1,067.50, including a $50.00 early tender consideration for those who participated prior to 5 p.m. ET on March 31. The amount does not include accrued interest.

The offer was scheduled to end at 5 p.m. ET on April 15.

The company said that the offers are part of a series of transactions through which Swiss Re seeks to exchange with HSBC outstanding debt securities, including subordinated notes that represent substantially all of the assets of Swiss Re Capital, for new euro-denominated perpetual subordinated fixed-to-floating callable loan notes to be issued by Swiss Re.

The exchanges are being made under an exchange settlement agreement, and the new loan notes are to be acquired by a vehicle against the issuance of perpetual fixed-to-floating notes.

The dealer managers are BofA Merrill Lynch (888 292-0070, 980 683-3215, 44 20 7995 2929 or kulwant.bhatti@baml.com), Commerzbank AG (49 69 136 59920 or Liability.Management@commerzbank.com), Deutsche Bank AG, London Branch (855 287-1922, 212 250-7527, 44 20 7545 8011 or liability.management@db.com), HSBC Bank plc (888 HSBC-4LM, 212 525-5552, 44 207 992 6237 or liability.management@hsbcib.com) and UBS Ltd. (888 719-4210, 203 719-4210, 44 20 7567 0525 or mark-t.watkins@ubs.com).

The tender and information agent is Lucid Issuer Services Ltd. (44 20 7704 0880; attn: David Shilson / Sunjeeve Patel at swissre@lucid-is.com).

Swiss Re is a reinsurance company based in Zurich.

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