HSBC accepts €707.55 million 5.252% perpetual step-up notes issued by ELM in tender offer

By Toni Weeks

San Luis Obispo, Calif., April 1 – HSBC Bank plc announced it has accepted for purchase €707.55 million of the outstanding €1 billion of 5.252% perpetual step-up notes issued by ELM BV, according to a notice. The tender offer expired on March 31.

The total consideration per €1,000 principal amount of notes is €1,060, for a total payout of €750,003. The company will also pay accrued interest up to the settlement date, expected to be April 1.

The tender offer for ELM’s notes was announced on March 18 along with an offer to purchase two series of Australian dollar-denominated notes. According to the notice, no Australian dollar-denominated notes are being accepted for purchase due to the “result of the operation of participation priorities.”

In addition, HSBC had offered to repurchase 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. This offer was contingent on the results of the concurrent offer for ELM’s 5.252% perpetual step-up notes.

The maximum amount of 6.854% preferreds accepted was to be 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. Since the amount was zero, the offer was terminated.

As previously reported, the company said that the offers were 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 were 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 were 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 was Lucid Issuer Services Ltd. (44 20 7704 0880; attn: David Shilson / Sunjeeve Patel at swissre@lucid-is.com).

Amsterdam-based ELM focuses on raising capital through the issuance of bonds, notes and other debt instruments.

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