Capital One prices exchange offer for 6.75% notes, gives early results

By Angela McDaniels

Tacoma, Wash., June 3 - Capital One Financial Corp. had received tenders for $758,866,000 principal amount, or 56.59%, of its $1,341,045,000 outstanding 6.75% senior notes due 2017 as of 5 p.m. ET on May 31, according to a company news release.

The company began an exchange offer for the notes on May 17. The early participation date was 5 p.m. ET on May 31, and the offer will end at 11:59 p.m. ET on June 14.

The company is offering new senior notes due 2023 and cash in exchange for the 6.75% notes.

The interest rate on the new notes will be 3.5%. The new issue yield on the new notes will be 3.544%, and the new notes value will be $1,095.94. These amounts were determined by reference to the bid-side yield of the 1.75% Treasury note due May 15, 2023 at 11 a.m. ET on June 3, which was 2.094%.

The total exchange price is $1,210.66 for each $1,000 principal amount of notes tendered by the early participation date. It will be paid in the following manner: $1,100 principal amount of new notes and $114.72 of cash, which is equal to the total exchange price minus the new notes value.

The exchange price is $1,190.66 for each $1,000 principal amount of notes tendered after the early participation date but prior to the offer expiation. It will be paid in the following manner: $1,100 principal amount of new notes and $94.72 of cash.

The prices were determined by reference to the yield of the 0.625% Treasury security due April 30, 2018 plus a spread of 65 basis points.

The company will also pay accrued interest up to but excluding the settlement date, which is expected to be June 6 for notes tendered by the early participation date and June 18 for notes tendered after that time. In the case of notes exchanged on the final settlement date, this amount will be reduced to reflect embedded interest on the new notes.

The exchange offer is conditioned on a minimum of $500 million principal amount of new notes being issued in exchange for old notes. The company said the amount of notes tendered by the early participation date will satisfy this condition.

D.F. King & Co., Inc. (800 290-6427 or, for banks and brokerage firms, 212 269-5550) is the information agent.

Capital One is a financial services company based in McLean, Va.

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