International Paper begins tender offer for 9.375%, 7.95% notes

By Marisa Wong

Madison, Wis., June 3 - International Paper Co. said it has begun a cash tender offer for up to $1 billion combined principal amount of its outstanding 9.375% notes due 2019 and 7.95% notes due 2018.

There is currently $858,918,000 of the 9.375% notes and $1,428,923,000 of the 7.95% notes outstanding, according to a press release.

The company said it reserves the right, but is not obligated, to increase the tender cap by up to $250 million.

Tendered notes will be accepted with priority given to the 9.375% notes. The company said it may accept tender notes of one or more of the series on a pro rata basis.

All 9.375% notes tendered at or before 5 p.m. ET on June 16, the early tender deadline, will be accepted first, and 7.95% notes tendered by the early tender deadline will be accepted second.

If the offer is fully subscribed as of 5 p.m. ET on June 16, the early tender deadline, notes tendered after the early deadline will not be accepted for purchase.

If the offer is not fully subscribed as of the early tender deadline, additional notes will be accepted for purchase in the following order: 9.375% notes tendered after the early tender deadline and before the expiration time and then 7.95% notes tendered after the early deadline and prior to the expiration time.

The tender offer is scheduled to expire at 11:59 p.m. ET on July 1.

Holders who tender their notes by the early tender deadline will receive the total consideration for each $1,000 principal amount of notes accepted for purchase. The total consideration includes a $30 early tender premium.

Holders who tender their notes after the early deadline and before the expiration time will receive the tender consideration, which is the total consideration less the early tender premium.

The company will also pay accrued interest to, but excluding, the applicable settlement date.

Payment for early tendered notes is expected to be June 18. The final settlement date is expected to be July 3.

The total consideration will be determined using a fixed spread over the yield based on the bid side price of the 1.5% U.S. Treasury due May 31, 2019. The fixed spread is 65 basis points for the 9.375% notes and 30 bps for the 7.95% notes.

Pricing will be calculated at 2 p.m. ET on June 17.

Tenders may be withdrawn at any time at or before the withdrawal deadline, which is 5 p.m. ET on June 16.

The tender offer is conditioned on International Paper obtaining proceeds from a concurrent public offering of senior debt securities in an amount not less than $1 billion on or before the early settlement date.

Citigroup Global Markets Inc. (800 558-3745 or 212 723-6106 collect), Deutsche Bank Securities Inc. (866 627-0391 or 212 250-2955 collect), HSBC Securities (USA) Inc. and UBS Securities LLC are the dealer managers for the tender offer. Global Bondholder Services Corp. (866 470-3700 or 212 430-3774) is the depositary and information agent.

Based in Memphis, International Paper manufactures industrial and consumer packaging and uncoated papers.

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