Lorillard Tobacco selling $500 million 10-year notes Wednesday at Treasuries plus high 100 bps area

By Andrea Heisinger

New York, May 15 - Lorillard Tobacco Co. is in the market Wednesday with a $500 million offering of 10-year senior notes (Baa3/BBB-/BBB-), according to an informed source and a 424B2 filing with the Securities and Exchange Commission.

Initial price talk on the notes is in the high 100 basis points over Treasuries area, the source said.

The notes will have a make-whole call over Treasuries until three months prior to maturity and then a call at par.

There is a change-of-control put at 101% as well as if there is a ratings downgrade.

Active bookrunners are Barclays, Goldman Sachs & Co. and Wells Fargo Securities LLC. Passive bookrunners are Fifth Third Securities Inc., J.P. Morgan Securities LLC and RBS Securities Inc.

Proceeds will be added to the company's general funds and used for general corporate purposes.

There is a guarantee on the notes from Lorillard, Inc.

The Greensboro, N.C.-based cigarette maker was last in the U.S. bond market with a $500 million sale of five-year notes on Aug. 16, 2012.

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