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Kraft prices tender for 5.625%, 6.25% notes, ups cap to $1.5 billion
By Angela McDaniels
Tacoma, Wash., Dec. 13 - Kraft Foods Inc. increased to $1.5 billion from $1 billion the principal amount of notes it will purchase in the tender offer for its $2 billion of 5.625% notes due 2011 and $1.5 billion of 6.25% notes due 2012, according to a company news release.
The company will purchase no more than $900 million of the 5.625% notes and $600 million of the 6.25% notes. Previously, these sub-limits were $600 million and $400 million, respectively.
As of 5 p.m. ET on Dec. 10, holders had tendered $1,031,360,000 of the 5.625% notes and $944,241,000 of the 6.25% notes. Because the offer is oversubscribed, the notes will be subject to proration.
The offer began on Nov. 29 and will end at midnight ET on Dec. 27. The settlement date is expected to be Dec. 29.
For each $1,000 principal amount, the company will pay $1,043.23 for the 5.625% notes and $1,077.62 for the 6.25% notes. These prices include an early tender premium of $30.00 for each note tendered by 5 p.m. ET on Dec. 10.
Holders will also receive accrued interest.
The purchase price for the 5.625% notes was determined using the yield based on the bid-side price of the 1% Treasury note due Oct. 31, 2011 and a spread of 15 basis points, and the price for the 6.25% notes was set using the 0.75% Treasury note due May 31, 2012 and 30 bps.
Pricing was fixed at 2 p.m. ET on Dec. 13. The reference yield was 0.305% for the 1% Treasury and 0.452% for the 0.75% Treasury.
Kraft plans to fund the offer with cash on hand and short-term borrowings.
Barclays Capital Inc. (800 438-3242 or 212 528-7581) and RBS Securities Inc. (877 297-9832 or 203 897-6145) are the dealer managers. The information agent and depositary is Global Bondholders Services Corp. (866 794-2200 or 212 430-3774).
Kraft is a confection, food and beverage company based in Northfield, Ill.
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