By Marisa Wong
Madison, Wis., Aug. 13 - WellPoint, Inc. announced the early results and pricing for its cash tender offer for $600 million of its outstanding notes.
As previously announced, the company is offering to purchase up to $300 million from each of its first-tranche notes, consisting of two note series, and second-tranche notes, consisting of four note series.
Pricing was set at 11 a.m. ET on Aug. 12 via a modified Dutch auction procedure and is based on a spread over the applicable U.S. Treasury note.
The actual series within each tranche and exact pricing are listed in the table below.
As of 5 p.m. ET on Aug. 12, the early tender time, the company had received tenders for about $580 million of first-tranche notes and $802.8 million of second-tranche notes.
According to a Tuesday press release, the company has decided to raise the tender cap for the second-tranche notes to $400 million from $300 million. Because the total amount of early tenders for each tranche still exceeds the respective tender cap, the company will accept the tendered notes for purchase on a prorated basis.
WellPoint said it will accept for purchase $300 million of the first-tranche notes and $400 million of the second-tranche notes and will not accept for purchase any notes tendered after the early tender time due to the oversubscription.
Holders who tendered their notes by the early deadline will receive the full tender offer consideration, which includes an early tender payment of $30.00 per $1,000 principal amount of notes. Holders will also receive accrued interest to the early settlement date, which was slated for Aug. 13.
The withdrawal deadline of 5 p.m. ET on Aug. 12 has passed and has not been extended.
The tender offers were set to expire at 11:59 p.m. ET on Aug. 26, with final settlement scheduled for Aug. 27.
The offers are conditioned on the closing of new financing in an amount equal to at least the aggregate amount of the tender caps. The company priced $1.25 billion of five-year and 30-year notes, as reported on July 30 by Prospect News.
BofA Merrill Lynch (888 292-0070 or collect 980 683-3215) and Deutsche Bank Securities Inc. (866 627-0391 or collect 212 250-2955) are the dealer managers. D.F. King & Co., Inc. (800 488-8095 or 212 269-5550) is the tender agent and information agent.
The Indianapolis-based health benefits company began the offers on July 30.
Tender results
| Notes | Amount outstanding | Amount tendered | Amount Accepted
|
| First-tranche notes
|
| 5.875% notes due 2017 | $700 million | $241.7 million | $153.3 million
|
| 7% notes due 2019 | $600 million | $338.3 million | $146.7 million
|
| Second-tranche notes
|
| 5.95% notes due 2034 | $500 million | $89.5 million | $51.7 million
|
| 5.85% notes due 2036 | $900 million | $322.5 million | $120.8 million
|
| 6.375% notes due 2037 | $800 million | $247.8 million | $146 million
|
| 5.8% notes due 2040 | $300 million | $143 million | $81.5 million
|
|
|
| Pricing
|
| Notes | Reference security | Spread | Tender offer consideration
|
| First-tranche notes
|
| 5.875% notes | 0.625% Treasury due May 31, 2017 | 75 bps | $1,155.06
|
| 7% notes | 2.75% Treasury due Feb. 15, 2019 | 80 bps | $1,241.39
|
| Second-tranche notes
|
| 5.95% notes | 3.125% Treasury due Feb. 15, 2043 | 123 bps | $1,142.98
|
| 5.85% notes | 3.125% Treasury due Feb. 15, 2043 | 123 bps | $1,133.51
|
| 6.375% notes | 3.125% Treasury due Feb. 15, 2043 | 113 bps | $1,227.84
|
| 5.8% notes | 3.125% Treasury due Feb. 15, 2043 | 131 bps | $1,126.67
|
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