Kellogg starts tender offer for up to $500 million 6.6% notes due 2011

By Jennifer Chiou

New York, Oct. 28 - Kellogg Co. announced the start of a cash tender offer for up to $500 million of its $1.428 billion of 6.6% notes due 2011.

The early tender date is 5 p.m. ET on Nov. 10. The offer will expire at 5 p.m. ET on Dec. 3.

For each $1,000 principal amount, the company will calculate its payout using the yield to maturity of the 0.875% Treasury due March 31, 2011 plus a spread of 50 basis points to 80 bps.

Those who tender prior to the early deadline will receive the early tender payment of $40 per $1,000 principal amount of notes.

Kellogg will also pay accrued interest.

Under the modified Dutch auction procedure, Kellogg said it will accept notes validly tendered in the order of highest to lowest spreads and will select as the clearing spread the highest spread that will allow it to purchase up to $500 million of the notes.

The company intends to begin a public offering of unsecured senior debt securities in order to fund the tender offer.

Goldman, Sachs & Co. (800 828-3182 or call collect 212 902-5183) and Morgan Stanley & Co. Inc. (800 624-1808 or call collect 212 761-5384) are the dealer managers.

The information agent is Global Bondholder Services Corp. (866 795-2200 or call collect 212 430-3774).

The convenience food company is based in Battle Creek, Mich.

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