British American Tobacco starts $2.9 billion capped debt tender offer

Chicago, July 31 – British American Tobacco’s debt issuing entities started a $2.9 billion capped debt tender offer on Monday, according to a press release.

The issuers are B.A.T Capital Corp., Reynolds American Inc. and B.A.T. International Finance plc.

The tender offer is being conducted with the notes divided into four pools, with each pool having a cap.

The caps are the maximum aggregate purchase price payable.

All of the notes below are listed in their pools in acceptance priority order.

Pool 1

The first pool, covering three notes, is capped at $635 million.

The three securities in the pool are:

• B.A.T. International Finance’s £500 million outstanding 7.25% guaranteed notes due 2024 (ISIN: XS0352062995) with pricing to be based on the 0.125% U.K. Treasury due Jan. 31, 2024 and a fixed spread of 45 basis points;

• B.A.T. Capital’s $2.5 billion outstanding 3.222% notes due 2024 (Cusip: 05526DAZ8) with pricing to be based on the 2.375% U.S. Treasury due Aug. 15, 2024 and a fixed spread of 25 bps; and

• B.A.T. Capital’s $1 billion outstanding 2.789% notes due 2024 (Cusip: 05526DBG9) with pricing to be based on the 3.25% U.S. Treasury due Aug. 31, 2024 and a fixed spread of 45 bps.

Pool 2

The second pool, also covering three notes, is capped at $750 million.

The three securities in the second pool are:

• B.A.T. International Finance’s $1.5 billion outstanding 3.95% notes due 2025 (Cusips: 05530QAK6, G08820CH6) with pricing to be based on the 4.75% U.S. Treasury due July 31, 2025 and a fixed spread of 60 bps and a subcap for the series of $700 million;

• B.A.T. Capital’s £450 million outstanding 2.125% guaranteed notes due 2025 (ISIN: XS1664647499) with pricing to be based on the 0.625% U.K. Treasury due June 7, 2025 and a fixed spread of 115 bps and a subcap for the series of £150 million; and

• Reynolds’ $2.5 billion outstanding 4.45% notes due 2025 (Cusip: 761713BG0) with pricing to be based on the 4.75% U.S. Treasury due July 31, 2025 and a fixed spread of 60 bps.

Pool 3

The third pool covers two series, with a maximum tender amount of $365 million.

The two securities are:

• B.A.T. International Finance’s £650 million outstanding 4% guaranteed notes due 2026 (ISIN: XS0969309847) with pricing to be based on the 1.5% U.K. Treasury due July 22, 2026 and a fixed spread of 130 bps;

• B.A.T. Capital’s $1 billion outstanding 3.215% notes due 2026 (Cusip: 05526DBJ3) with pricing to be based on the 4.5% U.S. Treasury due July 15, 2026 and a fixed spread of 65 bps.

Pool 4

The fourth pool relates to two series and has a maximum tender amount of $1.15 billion.

The two series are:

• B.A.T. Capital’s $3.5 billion outstanding 3.557% notes due 2027 (Cusip: 05526DBB0) with pricing to be based on the 4.125% U.S. Treasury due July 31, 2028 and a fixed spread of 100 bps and a subcap for the series of $1.1 billion; and

• B.A.T. International Finance’s €800 million outstanding 1.25% guaranteed notes due 2027 (ISIN: XS1203859928) with pricing to be based on the 2027 International Finance notes interpolated mid-swap rate plus a fixed spread of 25 bps and a subcap for the series of €155 million.

Notes

All of the considerations will include, when priced, a €50, $50 or £50 early tender consideration that will only be paid to noteholders who tender by the early deadline.

Accrued interest will also be paid.

The offers are subject to a financing condition.

Tenders may be prorated.

Details

The early tender date and the withdrawal deadline are 5 p.m. ET on Aug. 11.

Pricing will be determined at 10 a.m. ET on Aug. 14.

Early settlement is expected on Aug. 16.

The offers will expire at 5 p.m. ET on Aug. 28.

Final settlement will be Aug. 30.

Deutsche Bank Securities Inc. (866 627-0391), Deutsche Bank AG, London Branch (+44 20 7545 8011), Goldman Sachs & Co. LLC (+44 20 7774 4836, 800 828-3182) and Merrill Lynch International (+44 20 7996 5420, 888 292-0070, DG.LM-EMEA@bofa.com) are acting as dealer managers.

Global Bondholder Services Corp. is the information and tender agent (212 430-3774, 855 654-2015, contact@gbsc-usa.com).

British American Tobacco is a London-based international tobacco company.

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