Outlook 2022: GE leads mix of issuers bringing multi-billion-dollar LM exercises

By Wendy Van Sickle

Columbus, Ohio, Dec. 31 – A potpourri of media, automotive, retail, food and beverage, banking and tech names brought some of 2021’s biggest liability management exercises, and, as the curtain was poised to fall on the year, conglomerate General Electric Co. was at center stage, having brought an enormous $25 billion transaction in the fall that managed to dwarf its $7 billion deal in the spring.

Generally big deals

General Electric launched its eye-popping tender offer for 53 series of notes over three pools on Nov. 10, with plans to buy back up to $23 billion of notes in an offer to be funded with proceeds from GE’s sale of its GE Capital Aviation Services aircraft-leasing unit to AerCap for $30 billion.

If the initial size of the tender offer weren’t dizzying enough, the issuer announced it would accept tenders of about $25 billion of notes, which was still short of the $33.3 billion principal amount of securities tendered under the offer.

The tender offer took out dollar- and euro-denominated notes that were due to mature from 2022 through 2051.

Although much smaller than the issuer’s autumnal LM exercise, GE’s spring offer, launched May 24, for an original cap of $4.87 billion was nothing to sneeze at.

That offer for all dollar-denominated notes was also made in three parts – an any-and-all pool and two pools with $1 billion sub-caps apiece.

In June, the company announced it would raise the sub-caps to $2,725,360,000 and $3,912,511,000 for a total repurchase amount of $7 billion to match all of the tenders submitted by the early participation date except for those from one series that was prorated using a factor of 86.6%.

GE is based in Boston.

Exchange offer grows

On Aug. 2, Comcast Corp. and NBCUniversal Media, LLC started an offer to exchange notes from three separate pools of existing notes for up to $3 billion of new notes for each pool, or $9 billion of new notes in total.

On Aug. 16, the issuers announced the pool caps were being raised to $4 billion, $5 billion and $6 billion, which still resulted in the tenders from some low-acceptance-priority notes being prorated or, for two series not accepted at all.

Comcast, a Philadelphia-based media and technology company, issued new 2.887% notes due 2051, new 2.937% senior notes due Nov. 1, 2056 and new 2.987% senior notes due Nov. 1, 2063 and also paid cash for some series to settle the exchange.

Walmart rings up tender

Bentonville, Ark.-based discount retailer Walmart Inc. dropped by the LM scene in September when it launched a cash tender offer for up to $8 billion principal amount from 25 series of its outstanding debt securities.

The offer was oversubscribed at the early deadline, and the company announced it would increase the cap by 25% to $10 billion to accept most of the early tenders. Tenders of the lowest acceptance-priority notes were, however, prorated.

The tender offer knocked out notes with maturities from 2023 through 2049 and coupons from 2.375% to 7.55%.

Ford trucks out offer

On Nov. 4, Ford Motor Co. rolled out a tender offer for up to $5 billion principal amount of debt securities from 10 series, but the issuer stretched the cap to match the total amount of tender orders submitted by the early deadline: $6,795,510,000.

The Dearborn, Mich.-based automobile manufacturer put the brakes on any tenders submitted after the early deadline.

The exercise knocked out notes with coupons ranging from 6.375% to 9.98% and with maturities spanning from 2023 to 2047.

Wells Fargo shows up

In late January, Wells Fargo & Co. wholly owned subsidiary Wells Fargo Securities, LLC launched a cash tender offer for up to $4.5 billion of notes from 11 series.

Wells lifted the cap to $6.4 billion, but this still resulted in no tenders accepted from the bottom six series in terms of acceptance priority, while tenders of notes from the series in the fifth slot were prorated.

The San Francisco-based financial services company accepted tenders of notes maturing from 2021 through 2023.

Broadcom’s exchange

On Sept. 13, Broadcom Inc. offered existing noteholders the opportunity to exchange notes in two pools for up to $5 billion of new notes and cash, comprising a first pool for up to $2.75 billion of new notes due 2035 and a second pool for up to $2.25 billion of new notes due 2036. Notes covered by the exchange were issued by Broadcom Inc., Broadcom Corp. or CA, Inc.

Like so many other liability-management exercises, Broadcom’s cap was lifted at the early deadline. The San Jose, Calif.-based designer and developer of semiconductor and infrastructure software solutions raised the total deal ceiling to $6 billion, with $3.25 billion allotted for the first pool and $2.75 billion available for the second.

The enlarged caps still fell short of the amount of notes tendered for exchange for each pool by the early deadline, which was $4,137,003,000 for the first pool and $4,065,389,000 for the second.

Pepsi, Verizon launch

Global food and beverage company PepsiCo, Inc. and New York-based telecommunications company Verizon Communications Inc. each sprung $4 billion tender offers in the fall, with Pepsi’s opened on Oct. 6 and Verizon’s on Oct. 26.

Each of the issuers also announced an upsize to its offer cap at its early deadline to accommodate oversubscription.

In Pepsi’s case, its offer was expanded to $4.1 billion in order to accept all of the notes tendered by the early deadline.

Verizon, meanwhile, enlarged its cap to $4.8 billion, but this increase enabled the issuer to accept tenders only from the first four of the 15 series covered under the offer. No tenders were accepted from the bottom 11 priority issues.

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