Altria gets consents needed to amend $2.6 billion of notes

By Angela McDaniels

Tacoma, Wash., Feb. 14 - Altria Group, Inc. has received enough consents to amend its dollar-denominated notes, according to a company news release.

Altria and its subsidiary, Altria Finance (Cayman Islands) Ltd., began a tender offer and consent solicitation on Jan. 31 for $2.6 billion of notes and debentures and for €1 billion of bonds in connection with Altria's planned spinoff of Philip Morris International Inc.

The companies are soliciting consents to amend the indentures to clarify the application of certain provisions to the spinoff. Altria said it believes the spinoff is not prohibited by the indentures but wishes to eliminate any uncertainty by amending them.

Holders may either tender and deliver consents or deliver consents without tendering their securities.

Affected securities include the company's $350 million of 7.65% notes due 2008, $500 million of 5 5/8% notes due 2008, $1 billion of 7% notes due 2013, $750 million of 7¾% debentures due 2027 and €1.02 billion of 5 5/8% bearer bonds due 2008.

As of Feb. 13, the consent deadline, the company had received tenders and consents for $249.14 million, or 71.18%, of the 7.65% notes; for $353.52 million, or 70.7%, of the 5 5/8% notes; for $939.70 million, or 93.97%, of the 7% notes; and for $710.45 million, or 94.73%, of the 7¾% debentures.

As a result, Altria has executed supplemental indentures for these notes, and the amendments will become operative once the tendered notes are accepted for payment.

Holders had delivered tenders and consents for €412.91 million, or 40.38%, of the 5 5/8% bearer bonds as of the consent deadline. The company needs consents from holders of a majority of the bonds to effect the amendments.

On Thursday, Altria and Altria Finance amended the offer so that all holders who deliver consents will receive the consent payment. Originally, only holders who delivered consent by the consent deadline would receive the payment.

For each $1,000 or €1,000 principal amount, the consent payment will be $1.00 for the 7.65% and 5 5/8% notes, $12.50 for the 7% notes, $25.00 for the 7¾% debentures and €1.00 for the 5 5/8% bearer bonds.

The tender payout for the notes will be determined on Feb. 27 using the 5 1/8% Treasury due June 30, 2008 and a fixed spread of 15 basis points for the 7.65% notes; the 4 7/8% Treasury due Oct. 31, 2008 and 15 bps for the 5 5/8% notes; the 4¼% Treasury due Nov. 15, 2013 and 50 bps for the 7% notes; the 4¾% Treasury due Feb. 15, 2037 and 75 bps for the 7¾% debentures; and the 3¼% Bundesschatzanweisung due June 13, 2008 for the 5 5/8% bear bonds.

The company will also pay accrued interest to the payment date.

The offer for the dollar-denominated notes expires at 5 p.m. ET on Feb. 29, and the expiration time for the euro-denominated notes is 11 a.m. ET on Feb. 29.

New York-based Altria manufactures and sells tobacco products through its subsidiaries, Philip Morris International, Philip Morris USA Inc., John Middleton, Inc. and Philip Morris Capital Corp.

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