Tesco to purchase £800 million of five issues in tender; pricing set

By Susanna Moon

Chicago, Oct. 25 – Tesco plc said it will accept for purchase £800,001,393 principal amount of notes in the offers that ended at noon ET on Oct. 24.

Tesco said on Oct. 16 that it was holding separate tender offers for its £350 million 5½% notes due 2019, £515 million 5% notes due 2023, £200 million 6% notes due 2029, £200 million 5½% notes due 2033, £300 million 4 7/8% notes due 2042 and £500 million 5.2% notes due 2057.

Meanwhile, Tesco Corporate Treasury Services plc was tendering for its €1.25 billion 1 3/8% notes due 2019 guaranteed by Tesco plc.

The cap was raised from £700 million.

In the any-and-all offers, investors had tendered the following amount of notes with pricing set at 6 a.m. ET on Oct. 25 using a reference security and fixed spread as follows:

• £71,171,000 of the £173,221,000 notes due 2042 with pricing set at 105.951 using the 4½% U.K. Treasury gilt due Dec. 7, 2042 plus 245 basis points for a benchmark rate of 1.969% and a purchase yield of 4.468%; and

• £57 million of the £224.55 million notes due 2057 with pricing at 109.709 based on the 4¼% U.K. Treasury gilt due Dec. 7, 2055 plus 285 bps for a benchmark rate of 1.809% and a purchase yield of 4.659%.

Tesco will accept tenders for all £128,171,000 of the two note series.

For the other series, the companies were originally tendering for an amount equal to £700 million less the principal amount of notes purchased in the any-and-all offers.

On Wednesday, the capped offers purchase amount was set at £671,830,393, the release noted.

In the capped offers, the purchase amount will be as follows with pricing based on a reference security and fixed spread:

• €318,771,000, using a proration factor of 46.746%, of the €1.25 billion outstanding notes due July 2019 using a purchase yield of negative 0.1% for a purchase price of 102.464 assuming a settlement date of Oct. 30;

• £169,233,000 of the £350 million outstanding notes due December 2019 with pricing set at 109.143 using the 3¾% U.K. Treasury gilt due Sept. 7, 2019 plus 65 bps for a benchmark rate of 0.459% and a purchase yield of 1.112%;

• £150,925,000 of the £389,001,000 outstanding notes due 2023 with pricing at 113.094 using the 2¼% U.K. Treasury gilt due Sept. 7, 2023 plus 140 bps for a benchmark rate of 0.969% and a purchase yield of 2.383%;

• £41,368,000 of the £200 million outstanding notes due 2029 with pricing at 120.59 using the 6% U.K. Treasury gilt due Dec. 7, 2028 plus 235 bps for a benchmark rate of 1.456% and a purchase yield of 3.842%; and

• £24,472,000 of the £200 million outstanding notes due 2033 with pricing at 115.304 using the 4¼% U.K. Treasury gilt due June 7, 2032 plus 235 bps for a benchmark rate of 1.732% and a purchase yield of 4.124%.

Holders also will receive accrued interest.

After settlement on Oct. 30, the outstanding amount will be €931,229,000 for the July 2019 notes, £180,767,000 for the December 2019 notes, £238,076,000 for the 2023 notes, £158,632,000 of the 2029 notes, £175,528,000 of the 2033 notes, £102.05 million of the 2042 notes and £167.55 million of the 2057 notes, according to a separate company notice on Wednesday.

BNP Paribas (+44 20 7595 8668 or liability.management@bnpparibas.com), Commerzbank AG (+49 69 136 59920 or liability.management@commerzbank.com) and Lloyds Bank plc (+44 20 7158 1721 or liability.management@lloydsbanking.com) are the dealer managers.

Lucid Issuer Services Ltd. (+ 44 20 7704 0880 or tesco@lucid-is.com) is the information and tender agent.

Tesco is a Cheshunt, England-based grocery and retail chain.

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