Sonoco prices tender offer to buy some of its notes for $300 million

By Susanna Moon

Chicago, Nov. 5 - Sonoco Products Co. said it priced the cash tender offers to purchase some of its outstanding bonds for $300 million.

In the first offer, the company will pay $1,158.96 for each $1,000 principal amount of its $250 million 6.5% notes due 2013 plus accrued interest up to but not including the settlement date, which is expected to be Nov. 8.

The offer for the 6.5% notes does not include an early tender premium.

In the second offer, Sonoco will buy the maximum principal amount of its $150 million 5.625% notes due 2016 and $41,305,000 9.2% debentures due 2021 that it can purchase for $300 million less any amount it pays to repurchase its 6.5% notes.

For each $1,000 principal amount in this offer, holders will receive $1,170.06 per 5.625% note and $1,418.18 per 9.2% note tendered by 5 p.m. ET on Nov. 5, which includes a $30 early tender premium.

Holders who tender their notes after the early tender date but by the expiration time will receive the total payment minus $30.

The total payment was based on the bid-side price of the reference security plus a fixed spread minus accrued interest up to but excluding the settlement date.

Pricing for the 6.5% notes was based on a spread of 62.5 basis points over the 0.5% Treasury note due Oct. 15, 2013. For the 5.625% notes, it will be 125 bps over the 1.25% Treasury due Sept. 30, 2015, and for the 9.2% notes, it will be 175 bps over the 2.525% Treasury due Aug. 15, 2020.

The reference yields were set at 0.505% for the 6.5% notes, at 1.095% for the 5.625% notes and at 4.282% for the 9.2% notes, as of 2 p.m. ET on Nov. 5.

The tender offer yields were 1.130% for the 6.5% notes, 2.345% for the 5.625% notes and 2.532% for the 9.2% notes

Payments also will include accrued interest up to but excluding the settlement date.

The offer for the 6.5% notes will end at 5 p.m. ET on Nov. 5, and the maximum tender offer will expire at 5 p.m. ET on Nov. 22. They began on Oct. 25.

The offers were conditioned on the completion of one or more public offerings of at least $300 million principal amount of senior debt securities by the expiration of the first offer.

Sonoco said it has completed an offering that has satisfied that condition. The company sold an upsized $350 million of 5.75% 30-year senior notes on Oct. 25 to yield Treasuries plus 190 basis points. The size was initially $300 million.

Sonoco expects to purchase the bonds using proceeds from its previously announced offering of senior notes securities as well as other available cash resources.

Tendered notes could have been withdrawn up to 5 p.m. ET on Nov. 5.

Bank of America Merrill Lynch (888 292-0070 or collect 980 388-9217) and J.P. Morgan (866 834-4666 or collect 212 834-3424) are the dealer managers. Global Bondholder Services Corp. (212 430-3774 or 866 470-3900) is the depositary and information agent.

Sonoco Products is a Hartsville, S.C., manufacturer of paperboard-based and other industrial and consumer packaging products.

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