Pacific Life completes offer for 9.25% notes; no additional tenders

By Toni Weeks

San Luis Obispo, Calif., Jan. 31 - Pacific Life Insurance Co. said that its modified Dutch auction cash tender offer for a portion of its $1 billion of 9.25% surplus notes due June 15, 2039 expired at 11:59 p.m. ET on Jan. 30. The company also announced that it did not receive any additional tenders of notes after the early deadline, 5 p.m. ET on Jan. 15.

The company reported on Jan. 16 that it had received early tenders for $322,793,000 of notes by the early tender deadline and subsequently lifted the initial $250 million tender offer cap to the $322,793,000 early tender amount later that same day.

As previously noted, the total purchase price was $1,478.68 for each $1,000 principal amount of notes tendered by the early deadline, including an early tender payment of $50.00 per $1,000 of notes. Those who tendered their notes after the early deadline were to receive the total payment less the early tender premium.

Pricing was set using the yield to maturity of the 2.75% U.S. Treasury notes due Aug. 15, 2042 plus a spread of 270 basis points. The reference yield was 3.015%, and the tender yield was 5.715%.

The company also paid accrued interest to but excluding the settlement date of Jan. 22 for early tenders.

Under the modified Dutch auction, holders needed to specify the maximum spread in excess of the reference yield they would be willing to accept as the basis for determining the full tender offer payment in exchange for each $1,000 principal amount. The bid spread needed to be in increments of 2.5 bps within the range of 270 bps to 305 bps.

Holders who tendered their notes by the early tender date also had to specify a bid spread. Those tendering after the early deadline were to be deemed to have specified the maximum spread as their bid spread.

Calculation of the clearing spread was subject to the price cap; the full tender offer payment was not to exceed $1,500 per $1,000 principal amount.

The offer was subject to a minimum tender condition and a financing condition, both of which were satisfied. The company priced $500 million of 30-year 5.125% senior notes due 2043 on Jan. 16, as reported by Prospect News.

Goldman Sachs & Co. (800 828-3182 or collect 212 902-5183), Barclays (800 438-3242 or collect 212 528-7581) and Credit Suisse Securities (USA) LLC (800 820-1653 or collect 212 538-2147) were the dealer managers. Global Bondholder Services (866 795-2200) was the depositary and information agent.

The insurance company is based in Newport Beach, Calif.

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