By Andrea Heisinger
New York, Aug. 1 - Lorillard Tobacco Co. sold $750 million of senior notes (Baa2/BBB-) in two parts on Monday after a long bond was added prior to the launch, an informed source said.
The sale was initially only five-year notes, but a 30-year bond was later added due to investor demand.
That original $500 million of 3.5% five-year notes was priced at 99.727 to yield 3.56% with a spread of Treasuries plus 225 basis points.
The notes were sold at the tightest end of initial guidance in the range of 237 bps to 250 bps and revised guidance at 225 bps to 237.5 bps.
A $250 million tranche of 7% 30-year bonds priced at 99.207 to yield 7.064% with a spread of Treasuries plus 300 bps.
Price guidance 300 bps to 312.5 bps, and the bonds priced at the tight end of that range.
The bonds feature a change-of-control put at 101% if the company's ratings from the top three agencies fall below investment grade.
Active bookrunners were Barclays Capital Inc., Goldman Sachs & Co. and Wells Fargo Securities LLC. Passive bookrunners were J.P. Morgan Securities LLC and RBS Securities Inc.
The securities are guaranteed by Lorillard, Inc.
Proceeds are being added to the company's general funds and used for general corporate purposes, including the repurchase, redemption or retirement of securities including common stock. They may also be used for acquisitions, additions to working capital and for capital expenditures.
Lorillard last sold bonds in a $1 billion offering in two parts on April 7, 2010. The 8.125% bonds due 2040 from that sale were priced at 340 bps over Treasuries.
The tobacco company is based in Greensboro, N.C.
| Issuer: | Lorillard Tobacco Co.
|
| Guarantor: | Lorillard, Inc.
|
| Issue: | Senior notes
|
| Amount: | $750 million
|
| Bookrunners: | Barclays Capital Inc., Goldman Sachs & Co., Wells Fargo Securities LLC (active), J.P. Morgan Securities LLC, RBS Securities Inc. (passive)
|
| Change-of-control put: | 101%
|
| Trade date: | Aug. 1
|
| Settlement date: | Aug. 4
|
| Ratings: | Moody's: Baa2
|
| Standard & Poor's: BBB-
|
|
|
| Five-year notes
|
| Amount: | $500 million
|
| Maturity: | Aug. 4, 2016
|
| Coupon: | 3.5%
|
| Price: | 99.727
|
| Yield: | 3.56%
|
| Spread: | Treasuries plus 225 bps
|
| Call: | Non-callable
|
| Price talk: | 225 to 237.5 bps (revised); 237 to 250 bps (initial)
|
|
|
| 30-year bonds
|
| Amount: | $250 million
|
| Maturity: | Aug. 4, 2041
|
| Coupon: | 7%
|
| Price: | 99.207
|
| Yield: | 7.064%
|
| Spread: | Treasuries plus 300 bps
|
| Call: | Non-callable
|
| Price talk: | 300 to 312.5 bps
|
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