Swift buys back nearly all its 10 1/8%, 12½%, 11% notes, 10.25% convertibles in tender

By Susanna Moon

Chicago, July 12 - Swift & Co. and its affiliates, S&C Holdco 3, Inc. and Swift Foods Co., said it wrapped the tender offers and consent solicitations for the 10 1/8% senior notes due 2009, the 12½% senior subordinated notes due 2010, the 11% senior notes due 2010 and the 10.25% convertible senior subordinated notes due 2010.

The tender offers expired at 8 a.m. ET on July 11. S&C received tenders of 99.2% of 10 1/8% senior notes, 93.4% of 12½% subordinated notes, 99.9% of 11% senior notes and 99.9% of 10.25% convertible notes.

The company said JBS SA completed the acquisition of Swift from HM Capital Partners LLC and Booth Creek Management Corp. for $1.5 billion in cash. The tender offers were extended to coordinate the closing of the tender with the closing of acquisition.

As of 5 p.m. ET on July 5, S&C had received tenders of $265.8 million of outstanding 10 1/8% senior notes, or 99.2% of the principal amount, $137.7 million of subordinated notes, or 91.8%, $125.1 million of 11% senior notes, or 99.9%, and $94.2 million of convertible notes, or 99.9%.

On June 21, Swift announced pricing in the tender offer and said they received the necessary consents in their solicitation and tender offer for all of the 10 1/8% outstanding senior notes due 2009 and 12½% senior subordinated notes due Jan. 1, 2010 of Swift and 11% senior notes due 2010 of S&C Holdco as well as for the convertibles.

For each $1,000 principal amount of the 10.25% convertibles, the payout was to be $1,131.37, based on the present value of the redemption price of the notes on March 12, 2009, using a discount rate based on the yield to maturity of the 4¾% U.S. Treasury due Feb. 28, 2009. As of 2 p.m. ET on June 20, the reference yield was 4.989%.

By the consent deadline of 5 p.m. ET on June 20, Swift received tenders with consents for $261 million or 97.4% of the 10 1/8% notes, $132.6 million or 88.4% of the 12½% notes, $87.6 million or 70% of the 11% notes and $84.5 million of 89.7% of the 10.25% convertibles.

Swift has entered into supplemental indentures which will become operative when it buys the notes.

On June 20, the companies said that they will no longer pay any consent payments related to the offer.

The convertibles payout would have included a consent payment of $30.00 per $1,000 principal amount.

The companies are still soliciting consents to amend the note indentures to eliminate most of the affirmative and restrictive covenants and some events of default, and those who tender must deliver consent.

The consent deadline in each offer was set at 5 p.m. ET on June 20.

For each $1,000 principal amount of notes, the total consideration will now be $1,027.13 for the 10 1/8% notes, $1,038.54 for the 12½% notes and $1,047.50 for the 11% notes.

The payouts for the non-convertible notes would have included a $10.00 per $1,000 principal amount consent payment for notes tendered before the consent deadline.

The companies will pay accrued interest for all of the notes.

Settlement of the offers depends on conditions including receipt of consents from holders of a majority of each series of notes and completion of the merger.

Tenders for any series of notes may not be withdrawn after the supplemental indenture is executed, which is expected to happen promptly following the receipt of the needed consents.

J.P. Morgan Securities Inc. (800 245-8812 or collect 212 270-1477) is the dealer manager and solicitation agent. D.F. King & Co., Inc. (800 290-6427 or collect 212 269-5550) is the information agent.

Swift is a beef and pork producer based in Greeley, Colo.

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