Housing Securities extends exchange offer for 8 3/8% debenture stock

By Toni Weeks

San Luis Obispo, Calif., March 11 - Housing Securities 2 again amended the terms of its exchange offer for £72.55 million of the £180.85 million of 8 3/8% debenture stock 2019 issued by Housing Securities Ltd.

The expiration deadline is now noon ET on March 21, with pricing to occur at 10 a.m. ET on March 24 and settlement slated for March 28. Previously, the offer was set to expire on March 12 with pricing set for March 13 and settlement for March 20. The exchange offer began Feb. 4.

As previously reported, investors had tendered £44,825,606 of the 8 3/8% debenture stock as of the close of business on Feb. 14.

The company is offering to issue new sterling-denominated fixed-rate secured bonds in exchange for £72.55 million principal amount of the existing debenture stock.

The company announced on Feb. 27 that stockholders passed the proposal to amend the terms of the debenture stock in connection with the exchange offer at a meeting at 5 a.m. ET on Feb. 27.

The voting instruction fee is 0.15%. The payment of the fee is conditional on the issuer announcing that other conditions to the exchange offer have been satisfied or waived.

According to a prior press release, stockholders will receive the full payment regardless of when they participate in the offer. Originally, those who delivered their exchange instructions after the revocation deadline, noon ET on Feb. 14, would have received a payment reduced by 2%.

Also, exchange instructions received beginning Feb. 17 under the offer will be accepted in full until the offer cap is reached.

The principal amount of each holder's stock accepted for exchange will not be scaled down pari passu and on a pro rata basis if the target acceptance size is exceeded.

The issuer reserves the right not to accept any exchange instructions, the company already noted.

Pricing for the exchange offer will reflect the yield to maturity using the exchange yield, which will be the sum of the Stock Benchmark Gilt rate and the exchange spread of 100 basis points.

The proceeds of the stock issue were used to fund secured loans to 18 registered providers of social housing, the company previously said. Seven of the borrowers are asking to extend the maturity of their loans and lower the interest cost and, in some cases, to borrow additional amounts.

The new issue yield will be set using the bond benchmark gilt rate and a new spread of 120 bps.

The new issue price shall be as close as possible to 100% of the nominal amount of the new bonds.

The exchange offer is conditioned on a minimum amount of £38.5 million of net cash proceeds from the issue of additional new bonds and on a minimum of £72.55 million principal amount of the stock offered for exchange.

The dealer manager is Deutsche Bank AG, London Branch (+44 20 7545 8011, attn: liability management, email: liability.management@db.com). The receiving agent is Computershare Investor Services plc (corporate action projects, +44 0 870 707 1060, investorcentre.com/contactus).

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