HSBC Holdings gives final tally under exchange, tender offers

By Marisa Wong

Los Angeles, Sept. 14 – HSBC Holdings plc announced the final results of its exchange offers for six series of notes and concurrent cash tender offers for three of the six series.

The offers began on Aug. 2 and expired at 11:59 p.m. ET on Sept. 13. Due to some amendments to the consideration payable in the exchange offers and the tender offers, the company had extended the expiration time from 11:59 p.m. ET on Aug. 29, as previously reported.

HSBC has accepted all notes tendered for exchange under the exchange offer and all notes tendered under the concurrent tender offer, according to a Wednesday press release.

Exchange offers

HSBC offered to exchange existing subordinated notes from six series for corresponding series of subordinated notes to be issued by the company that will be registered under the Securities Act of 1933.

In exchange for each $1,000 principal amount of original notes tendered, holders are eligible to receive a total consideration of $1,015, comprising $1,000 principal amount of exchange notes of the corresponding series and a cash incentive of $15, previously increased from $3.50.

As of the expiration time, holders had tendered and the issuer has accepted for exchange the following existing notes:

• $96,878,000 of the $222,042,000 outstanding 7.35% subordinated notes due 2032 (Cusip: 404280AE9);

• $218,851,000 of the $483,613,000 outstanding 7.625% subordinated notes due 2032 (Cusip: 404280AF6) (A 7.625% notes due 2032);

• All $4.3 million outstanding 7.625% subordinated notes due 2032 (Cusip: 404280AD1, G4634UAV4) (B 7.625% notes due 2032);

• $569,189,000 of the $2 billion outstanding 6.5% subordinated notes due 2036 (Cusip: 404280AG4);

• $985.36 million of the $2.5 billion outstanding 6.5% subordinated notes due 2037 (Cusip: 404280AH2); and

• $538,705,000 of the $1.5 billion outstanding 6.8% subordinated notes due 2038 (Cusip: 404280AJ8).

The exchange notes will be issued and the cash incentive will be paid on Sept. 16.

As previously announced, the exchange offers are being conducted primarily in order to introduce a clause regarding contractual recognition of the U.K. bail-in power, which is not present in the original notes. While the terms of the exchange notes will be substantially similar to those of the original notes in all other material respects, including coupon and maturity, they will feature ancillary amendments to a limited number of provisions to reflect recent legislative and regulatory developments.

Tender offers

Concurrently with the exchange offers, HSBC offered to purchase for cash the 7.35% notes due 2032 and both sets of 7.625% notes due 2032, up to a maximum aggregate principal amount of $70 million.

As of the expiration deadline, holders had tendered $416,000 of the 7.35% notes due 2032, $1,254,000 of the A 7.625% notes due 2032 and none of the B 7.625% notes due 2032.

The company has accepted for purchase all of the tendered 7.35% notes due 2032 and A 7.625% notes due 2032 for aggregate considerations of $470,304.64 and $1,436,732.88, respectively.

The aggregate considerations are based on purchase prices of $1,130.54 for the 7.35% notes due 2032 and $1,145.72 for the A 7.625% notes due 2032.

The consideration for each series was calculated based on the 2.875% U.S. Treasury due May 15, 2032 and a fixed spread of 220 basis points, instead of the 235 bps originally set. Pricing was determined at 11 a.m. ET on Sept. 13.

The company will also pay accrued interest.

Payment will be made on Sept. 16.

As previously noted, the tender offers are being extended solely to holders of notes from those three series that are not qualified institutional buyers as defined in Rule 144A under the Securities Act and hold an aggregate principal amount of less than $200,000 in the relevant series.

HSBC Securities (USA) Inc. (888 HSBC-4LM, 212 525-5552 or +44 20 7992 6237) is dealer manager for the exchange offers and cash tender offers.

Global Bondholder Services Corp. (212 430-3774, 855 654-2014 or contact@gbsc-usa.com) is exchange agent, depositary and information agent.

HSBC Holdings plc, the parent company of the HSBC Group, is based in London.

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