Liberty Mutual starts $700 million Dutch, waterfall offers for notes

By Jennifer Chiou

New York, April 18 - Liberty Mutual Group Inc. announced two separate tender offers for a total of four series of notes.

The Dutch auction tender offer with a $350 million cap applies to the company's $939,849,000 of outstanding 10.75% series C junior subordinated notes and Liberty Mutual Insurance Co.'s $435,083,000 of 7.697% surplus notes due 2097.

The waterfall tender offer, also with a $350 million cap, involves Liberty Mutual Group's $179,599,000 of outstanding 7.3% senior notes due 2014 and its $500 million of 5.75% senior notes due 2014.

The offers will end at 11:59 p.m. ET on May 15.

Dutch auction tender

The bid price range for the 10.75% notes is $1,340 to $1,440 per $1,000 principal amount. It is $950 to $1,050 for the 7.697% notes, both including a $50.00 early tender payment for those who submit their tenders prior to 5 p.m. ET on May 1.

The company will also pay accrued interest.

Waterfall offer

The 7.3% notes have acceptance priority over the 5.75% notes.

The purchase prices for the affected securities will be calculated using the 0.75% Treasury due June 15, 2014 plus a fixed spread of 150 basis points for the 7.3% notes and the 1.25% Treasury due March 15, 2014 plus 150 bps for the 5.75% notes.

The payouts will include a $30.00 early tender premium per $1,000 principal amount for tenders prior to 5 p.m. ET on May 1

Liberty will also pay accrued interest.

The Dutch auction offer is not conditioned on new notes being issued, but the waterfall offer is conditioned on a new issue of at least $350 million of notes.

Bank of America Merrill Lynch (888 292-0070 or 980 683-3215) and J.P. Morgan Securities LLC (866 834-4666 or 212 834-4811) are the dealer managers. Global Bondholder Services Corp. (866 795-2200) is the information agent.

Liberty Mutual is a subsidiary of Liberty Mutual Holding Co. Inc., a Boston-based property and casualty insurer.

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