By Angela McDaniels
Tacoma, Wash., July 28 - Fortune Brands, Inc. began tender offers for about $2.5 billion outstanding principal amount of its notes. The total purchase price for the notes will be capped at $1 billion, according to a company news release.
The notes eligible for exchange and their acceptance priority levels are noted in the table below. If the offer is oversubscribed, Fortune Brands will accept notes for purchase in the order of their priority levels.
The company said it will purchase no more than $500 million principal amount of the 5.375% notes due 2016.
The total purchase price for each $1,000 principal amount of notes will be the price that results in a yield to maturity equal to the yield to maturity on the applicable U.S. Treasury reference security as determined at 11 a.m. ET on Aug. 22 plus a fixed spread. The reference securities and fixed spreads, expressed in basis points, can be found in the table.
Each total purchase price includes an early tender payment of $30 per $1,000 principal amount of notes tendered by 5 p.m. ET on Aug. 10, the early tender date.
Holders will also receive accrued interest up to but excluding the settlement date, which is expected to be Aug. 25.
Each offer will expire at 11:59 p.m. ET on Aug. 24.
The tender offers will be funded with up to $1 billion of the anticipated net proceeds from the sale of the company's Acushnet Co. golf business. Fortune Brands said it wants to reduce debt and further strengthen the capital structures of its beam business and its home and security business.
The tender offers are subject to various conditions that include the sale of the golf business.
The lead dealer managers are Barclays Capital Inc. (800 438-3242 or 212 528-7581) and J.P. Morgan Securities LLC (866 834-4666 or 212 834-4811). The information agent and depositary is D.F. King & Co., Inc. (800 848-3416 or 212 269-5550).
Fortune Brands is a consumer brands company based in Deerfield, Ill.
| Notes | Outstanding amount | Priority level | Spread | Reference Treasury
|
| 5.375% notes due 2016 | $950 million | 1 | 90 | 1.5% due June 30, 2016
|
| 8.625% debentures due 2021 | $90,986,000 | 2 | 210 | 3.125% due May 15, 2021
|
| 7.875% debentures due 2023 | $150 million | 3 | 230 | 3.125% due May 15, 2021
|
| 4.875% notes due 2013 | $300 million | 4 | 100 | 0.375% due June 30, 2013
|
| 6.375% notes due 2014 | $500 million | 5 | 90 | 0.625% due July 15, 2014
|
| 6.625% debentures due 2028 | $200 million | 6 | 185 | 4.75% due Feb. 15, 2041
|
| 5.875% notes due 2036 | $300 million | 7 | 185 | 4.75% due Feb. 15, 2041
|
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