Wal-Mart tenders for up to $8.5 billion of notes from 13 series

By Marisa Wong

Morgantown, W.Va., Oct. 6 – Wal-Mart Stores, Inc. said it has begun a cash tender offer for 13 series of its outstanding debt securities.

The maximum aggregate purchase price is $8.5 billion, which includes principal, premium and an early participation amount but excludes accrued interest. The company said it will not amend the maximum amount.

The offer will expire at 11:59 p.m. ET on Nov. 3.

The following securities are subject to the tender offer and are listed in order of acceptance priority level with the reference security and fixed spread that will be used to determine pricing:

• $1,762,000,000 of outstanding 6.5% notes due Aug. 15, 2037. Pricing will be determined using the 3% U.S. Treasury due May 15, 2047 and a fixed spread of 65 basis points, for a hypothetical total consideration of $1,412.23 per $1,000 principal amount;

• $1,822,000,000 of outstanding 6.2% notes due April 15, 2038, to be priced using the 3% U.S. Treasury due May 15, 2047 and a fixed spread of 63 bps, for a hypothetical total consideration of $1,382.04 per $1,000 principal amount;

• $1.25 billion of outstanding 5.625% notes due April 1, 2040, to be priced using the 3% U.S. Treasury due May 15, 2047 and a fixed spread of 70 bps, for a hypothetical total consideration of $1,304.91 per $1,000 principal amount;

• $2 billion of outstanding 5.625% notes due April 15, 2041, to be priced using the 3% U.S. Treasury due May 15, 2047 and a fixed spread of 70 bps, for a hypothetical total consideration of $1,313.95 per $1,000 principal amount;

• $2.5 billion of outstanding 5.25% notes due Sept. 1, 2035, to be priced using the 3% U.S. Treasury due May 15, 2047 and a fixed spread of 50 bps, for a hypothetical total consideration of $1,241.89 per $1,000 principal amount;

• $1.25 billion of outstanding 5% notes due Oct. 25, 2040, to be priced using the 3% U.S. Treasury due May 15, 2047 and a fixed spread of 70 bps, for a hypothetical total consideration of $1,212.96 per $1,000 principal amount;

• $750 million of outstanding 4.875% notes due July 8, 2040, to be priced using the 3% U.S. Treasury due May 15, 2047 and a fixed spread of 70 bps, for a hypothetical total consideration of $1,191.90 per $1,000 principal amount;

• $750 million of outstanding 4.75% notes due Oct. 2, 2043, to be priced using the 3% U.S. Treasury due May 15, 2047 and a fixed spread of 72 bps, for a hypothetical total consideration of $1,181.82 per $1,000 principal amount;

• $1 billion of outstanding 4.3% notes due April 22, 2044, to be priced using the 3% U.S. Treasury due May 15, 2047 and a fixed spread of 66 bps, for a hypothetical total consideration of $1,119.88 per $1,000 principal amount;

• $1 billion of outstanding 4% notes due April 11, 2043, to be priced using the 3% U.S. Treasury due May 15, 2047 and a fixed spread of 65 bps, for a hypothetical total consideration of $1,069.44 per $1,000 principal amount;

• $750 million of outstanding 5.875% notes due April 5, 2027, to be priced using the 2.25% U.S. Treasury due Aug. 15, 2027 and a fixed spread of 40 bps, for a hypothetical total consideration of $1,253.88 per $1,000 principal amount;

• $500 million of outstanding 4.125% notes due Feb. 1, 2019, to be priced using the 1.375% U.S. Treasury due Sept. 30, 2019 and a fixed spread of negative 5 bps, for a hypothetical total consideration of $1,033.25 per $1,000 principal amount; and

• $1.5 billion of outstanding 3.625% notes due July 8, 2020, to be priced using the 1.375% U.S. Treasury due Sept. 15, 2020 and a fixed spread of 0 bps, for a hypothetical total consideration of $1,051.60 per $1,000 principal amount.

The hypothetical total consideration assumes early settlement of tenders and uses the reference yield measured at 10 a.m. ET on Oct. 6. Actual pricing will be determined at 10 a.m. ET on Oct. 23.

The total consideration includes an early participation amount of $30.00 per $1,000 principal amount of securities tendered at or prior to 5 p.m. ET on Oct. 20, the early participation date.

Holders tendering after the early participation date, but at or prior to the expiration date, will only be eligible to receive the applicable tender offer consideration, which is the applicable total consideration less the early participation amount.

Holders will also be paid any accrued interest.

Tenders may be withdrawn at any time at or prior to 5 p.m. ET on Oct. 20.

The company will accept for purchase all securities tendered by the expiration date, subject to the offer cap, based on acceptance priority levels and subject to proration. Securities tendered by the early participation date will be accepted for purchase in priority to securities tendered after the early deadline, regardless of the priority of the series of the later tendered securities.

The offer is subject to a financing condition.

The company will purchase early tendered notes on Oct. 24. Final settlement is expected to be Nov. 6.

The company said it is making the tender offer to purchase some outstanding debt securities to reduce interest expense.

“As we did with the transaction we completed in July, this tender offer allows us to take advantage of the favorable interest rate environment and reduce our interest expense prospectively,” Brett Biggs, executive vice president and chief financial officer, said in the press release.

Credit Suisse Securities (USA) LLC (800 820-1653, 212 325-2476, attn.: liability management group), Goldman Sachs & Co. LLC (800 828-3182, 212 902-6595, attn.: liability management group) and Wells Fargo Securities, LLC (866 309-6316, 704 410-4760, attn.: liability management group) are pricing joint lead dealer managers; BNP Paribas Securities Corp., Citigroup Global Markets Inc. and J.P. Morgan Securities LLC are also joint lead dealer managers; Barclays, HSBC Securities (USA) Inc., Mizuho Securities USA LLC, Morgan Stanley & Co. LLC, MUFG Securities Americas Inc., Santander Investment Securities Inc., Standard Chartered Bank and U.S. Bancorp Investments, Inc. are senior co-dealer managers; and CastleOak Securities, LP and Samuel A. Ramirez & Co., Inc. are co-dealer managers.

Global Bondholder Services Corp. (attn.: corporate actions, contact@gbsc-usa.com, http://www.gbsc-usa.com/Wal-Mart/, 212 430-3774, 866 924-2200) is information agent.

The discount retailer is based in Bentonville, Ark.

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