By Toni Weeks
San Luis Obispo, Calif., June 6 - Allstate Corp. said it received tenders for about $1.8 billion of its outstanding debt as of the early tender time, 5 p.m. ET on June 5, for the company's tender offers for nine series of notes.
Allstate began the tender offers on May 22 as part of the company's capital management plan, which includes cash tenders, debt prefunding and proposed new issues of preferred stock, subordinated hybrid debt and senior debt and is intended to enhance the company's strategic and capital flexibility, according to a company press release.
The company also announced it has upsized the amount it will purchase in its first tranche and second tranche waterfall offers. Because of the upsizing, Allstate said it will accept all of the notes validly tendered by the early tender time.
In the first tranche waterfall offer, the company will purchase up to $475 million, upsized from $400 million, of two notes series. The company received tenders for the following by the early tender time:
• $375,067,000, or 53.58%, of its $700 million of 7.45% senior notes, series B, due 2019; and
• $72,604,000, or 29.04%, of its $250 million of 6.75% senior debentures due 2018.
In the second tranche waterfall offer, the company will purchase up to $1.2 billion, upsized from $1.1 billion, of six notes series and received tenders for the following by the early tender time:
• $84,834,000, or 33.93%, of its $250 million of 6.9% senior debentures due 2038;
• $89,503,000, or 35.8%, of its $250 million of 6.125% senior notes due 2032;
• $244,876,000, or 37.67%, of its $650 million of 5.95% senior notes due 2036;
• $236,695,000, or 29.59%, of its $800 million of 5.55% senior notes due 2035;
• $76,509,000, or 19.13%, of its $400 million of 5.35% senior notes due 2033; and
• $379,449,000, or 75.89%, of its $500 million of 5.2% senior notes due 2042.
The notes in the first and second tranche waterfall offers are listed in order of acceptance priority.
In another offer, the company is offering to purchase any and all of its $500 million of series B 6.125% fixed-to-floating junior subordinated debentures due 2067. According to the press release, Allstate received tenders for $235,019,000, or 47%, of the notes by the early tender time.
Pricing results
Pricing for the offers was set at 2 p.m. ET on June 6 using a fixed spread over the bid-side yield on the reference security, as noted below.
Pricing for the first tranche waterfall offer was based on the 0.625% Treasury note due April 30, 2018, and pricing for the second tranche waterfall offer was based on the 3.125% Treasury note due Feb. 15, 2043. Pricing for the any and all offer was set using the 0.625% Treasury note due April 30, 2018.
The total purchase prices include a $30 premium for notes tendered by the early tender date. Those who tender after this will not receive the $30 premium.
Allstate is also paying accrued interest from the most recent previous interest payment date to but not including the applicable settlement date.
| First tranche waterfall notes | Fixed spread | Purchase yield | Full consideration
|
| 7.45% senior notes due 2019 | 75 | 1.729% | $1,319.84
|
| 6.75% senior debentures due 2018 | 40 | 1.379% | $1,253.76
|
|
|
| Second tranche waterfall notes | Fixed spread | Purchase yield | Full consideration
|
| 6.9% senior debentures due 2038 | 85 | 4.045% | $1,445.39
|
| 6.125% senior notes due 2032 | 70 | 3.895% | $1,302.53
|
| 5.95% senior notes due 2036 | 70 | 3.895% | $1,308.42
|
| 5.55% senior notes due 2035 | 70 | 3.895% | $1,242.20
|
| 5.35% senior notes due 2033 | 70 | 3.895% | $1,200.48
|
| 5.2% senior notes due 2042 | 85 | 4.045% | $1,194.56
|
|
|
| Any and all offer | Fixed spread | Purchase yield | Full consideration
|
| Series B 6.125% fixed-to-floaters due 2067 | 205 | 3.029% | $1,113.12
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| More offer terms
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| Each offer is conditioned on completion of an offering of securities but is not conditioned on the tender of any minimum principal amount of notes or the completion of any of the offers, a previous press release noted.
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| The tender offers will end at 11:59 p.m. ET on June 19.
|
| Tendered notes may no longer be withdrawn, as of the early tender deadline.
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| The company expects to settle the accepted notes on June 20, according to the release.
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| Credit Suisse Securities (USA) LLC (800 | 820-1653 or collect 212 | 538-2147) and Goldman Sachs & Co. (800 | 828-3182 or collect 212 | 357-0215) are the dealer managers. Global Bondholder Services Corp. (866 | 795-2200 or 212 | 430-3774) is the tender agent and information agent.
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| $3 billion bonds targeted
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| The company previously said it plans to retire about $3 billion of outstanding senior and subordinated bonds by using a combination of preferred stock, debt and cash, according to a previous press release.
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| The capital plan will consist of retiring debt primarily through new issues, according to Steve Shebik, Allstate's chief financial officer, in the company press release.
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| The company will repay or prefund $1.2 billion of debt coming due in 2013 and 2014, he said.
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| The tender offers for some of the company's $4.3 billion of outstanding debt at a premium are part of the capital plan, Shebik noted in the release.
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| Funding will come from the issue of perpetual preferred stock, subordinated hybrid debt, senior debt and cash.
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| "Today's announcement is another example of Allstate's proactive and disciplined capital management," Thomas J. Wilson, the company's chairman, president and chief executive officer, said in the press release.
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| "The net result will be more equity in the capital structure, lower capital cost and a longer maturity profile, with no meaningful impact on ongoing earnings. These actions further enhance our strategic and capital flexibility and take advantage of the current unprecedented low cost of these capital sources."
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| The issuer is a Northbrook, Ill.-based insurance company.
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