Santander gets tenders for 48% of tier 1 hybrids in exchange offer

By Jennifer Chiou

New York, Sept. 24 - Banco Santander, SA and subsidiary Santander Financial Exchanges Ltd. announced the wrap of the exchange offer for six series of the group's dollar-denominated tier 1 hybrid securities that began on Aug. 25.

It received tenders for exchange for about 48% of the existing securities.

The exchange offer expired at 5 p.m. ET on Sept. 23.

The bank offered cash and up to $1,286,200,000 of new 10.5% non-cumulative series 10 guaranteed preferred securities and up to $800 million of 10.5% fixed-to-floating non-cumulative series 11 guaranteed preferred securities. As a result of the tenders detailed below, the bank said that it will issue $825,109,575 of the 10.5% series 10 preferreds and $161,587,000 of the fixed-to-floating preferreds.

As already noted, the fixed spread of the fixed-to-floating preferreds is Libor plus 7.673%.

The series 10 preferreds have a par value of $25 each, and the series 11 preferreds have a par value of $1,000 each. Both are being issued by Santander Finance Preferred, SA Unipersonal.

Specifically, the bank was offering:

• $78 of series 10 preferreds and $12 in cash for every $100 liquidation preference of the group's $190 million 6.41% non-cumulative series 1 preferreds;

• $77 of series 10 preferreds and $13 in cash for every $100 liquidation preference of the group's $500 million 6.8% non-cumulative series 4 preferreds;

• $72 of series 10 preferreds and $13 in cash for every $100 liquidation preference of the group's $600 million 6.5% non-cumulative series 5 preferreds;

• $46 of series 10 preferreds and $9 in cash for every $100 liquidation preference of the group's $350 million floating-rate non-cumulative series 6 preferreds;

• $80 of series 10 preferreds and $10 in cash for every $100 liquidation preference of the $200 million 7.3% Sovereign depositary shares. Every $25 liquidation preference of these depositary shares represents a one one-thousandth interest a share of series C non-cumulative perpetual preferred stock; and

• $800 of series 11 preferreds and $100 in cash for every $1,000 liquidation amount of the $1 billion 8.963% non-cumulative trust preferreds guaranteed by Abbey National plc.

Banco Santander said it accepted tenders for:

• 4,028,302 of the 6.41% preferreds;

• 13,529,373 of the 6.8% preferreds;

• 19,621,398 of the 6.5% preferreds;

• 5,583,978 of the floating-rate preferreds;

• 3,443,334 of the 7.3% Sovereign depositary shares; and

• 202,012 of the 8.963% trust preferreds.

The bank said the purpose of the exchange offer was to improve the efficiency of the group's capital structure and to strengthen its balance sheet.

Morgan Stanley & Co. Inc. was the dealer manager, and Acupay System LLC (212 422-1222 or 888 385-2663) was the exchange agent.

Banco Santander is a commercial and private bank based in Madrid.

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