Tender Offer to Purchase Outstanding Notes

RNS Number : 6761T

Tesco PLC

16 October 2017

 

THIS ANNOUNCEMENT RELATES TO THE DISCLOSURE OF INFORMATION THAT QUALIFIED OR MAY HAVE QUALIFIED AS INSIDE INFORMATION WITHIN THE MEANING OF ARTICLE 7(1) OF THE MARKET ABUSE REGULATION (EU) 596/2014.

NOT FOR DISTRIBUTION IN OR INTO OR TO ANY PERSON LOCATED OR RESIDENT IN THE UNITED STATES, ITS TERRITORIES AND POSSESSIONS (INCLUDING PUERTO RICO, THE U.S. VIRGIN ISLANDS, GUAM, AMERICAN SAMOA, WAKE ISLAND AND THE NORTHERN MARIANA ISLANDS), ANY STATE OF THE UNITED STATES OR THE DISTRICT OF COLUMBIA (the United States) OR IN OR INTO ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO RELEASE, PUBLISH OR DISTRIBUTE THIS ANNOUNCEMENT (SEE "OFFER AND DISTRIBUTION RESTRICTIONS" BELOW).

Tesco Corporate Treasury Services PLC announces Tender Offer for its €1,250,000,000 1.375 per cent. Notes due 2019 and guaranteed by Tesco PLC

and

Tesco PLC announces Tender Offers for its £350,000,000 5.50 per cent. Notes due 2019, £515,000,000 5 per cent. Notes due 2023, £200,000,000 6 per cent. Notes due 2029, £200,000,000 5.50 per cent. Notes due 2033, £300,000,000 4.875 per cent. Notes due 2042 and £500,000,000 5.20 per cent. Notes due 2057

16 October 2017.

Tesco Corporate Treasury Services PLC (TCTS) announces today an invitation to holders of its outstanding €1,250,000,000 1.375 per cent. Notes due 2019 and guaranteed by Tesco (as defined below) (ISIN: XS1082970853) (the July 2019 Notes) and Tesco PLC (Tesco and, together with TCTS, the Offerors) announces today separate invitations to holders of its outstanding (a) £350,000,000 5.50 per cent. Notes due 2019 (ISIN: XS0159013068) (the December 2019 Notes), (b) £515,000,000 5 per cent. Notes due 2023 (ISIN: XS0248392812) (the 2023 Notes), (c) £200,000,000 6 per cent. Notes due 2029 (ISIN: XS0105244585) (the 2029 Notes), (d) £200,000,000 5.50 per cent. Notes due 2033 (ISIN: XS0159013142) (the 2033 Notes), (e) £300,000,000 4.875 per cent. Notes due 2042 (ISIN: XS0248395245) (the 2042 Notes) and (f) £500,000,000 5.20 per cent. Notes due 2057 (ISIN: XS0289810318) (the 2057 Notes and, together with the July 2019 Notes, the December 2019 Notes, the 2023 Notes, the 2029 Notes, the 2033 Notes and the 2042 Notes, the Notes and each a Series) to tender their Notes for purchase by TCTS or Tesco, as applicable, for cash (each such invitation an Offer and, together, the Offers).

The Offers are being made on the terms and subject to the conditions contained in the tender offer memorandum dated 16 October 2017 (the Tender Offer Memorandum) prepared by the Offerors, and are subject to the offer restrictions set out below and as more fully described in the Tender Offer Memorandum.

Copies of the Tender Offer Memorandum are (subject to distribution restrictions) available from the Information and Tender Agent as set out below. Capitalised terms used in this announcement but not defined have the meanings given to them in the Tender Offer Memorandum.

Summary of the Offers

Notes	Issuer and Offeror	ISIN / Common Code	Outstanding Nominal Amount	Relevant Benchmark Security	Purchase Spread	July 2019 Notes Purchase Yield*	Amount subject to relevant Offer(s)
2042 Notes	Tesco PLC	XS0248395245 / 024839524	£173,221,000	4½ per cent. UK Treasury Gilt due 07 December 2042 (ISIN: GB00B1VWPJ53)	245 bps	N/A	Any and all
2057 Notes	Tesco PLC	XS0289810318 / 028981031	£224,550,000	4¼ per cent. UK Treasury Gilt due 07 December 2055 (ISIN: GB00B06YGN05)	285 bps	N/A	Any and all

Notes	Issuer and Offeror	ISIN / Common Code	Outstanding Nominal Amount	Relevant Benchmark Security	Purchase Spread	July 2019 Notes Purchase Yield*	Amount subject to relevant Offer(s)
July 2019 Notes	Tesco Corporate Treasury Services PLC	XS1082970853 / 108297085	€1,250,000,000	Not Applicable	N/A	-0.10 per cent.	Subject as set out in the Tender Offer Memorandum, an aggregate nominal amount of July 2019 Notes, December 2019 Notes, 2023 Notes, 2029 Notes and/or 2033 Notes (converted into Sterling, where applicable, at the Applicable Exchange Rate) of up to (a) £700,000,000 less (b) the aggregate nominal amount of 2042 Notes and 2057 Notes accepted for purchase pursuant to the relevant Offers
December 2019 Notes	Tesco PLC	XS0159013068 / 015901306	£350,000,000	3¾ per cent. UK Treasury Gilt due 07 September 2019 (ISIN: GB00B4YRFP41)	65 bps	N/A
2023 Notes	Tesco PLC	XS0248392812 / 024839281	£389,001,000	2¼ per cent. UK Treasury Gilt due 07 September 2023  (ISIN: GB00B7Z53659)	140 bps	N/A
2029 Notes	Tesco PLC	XS0105244585 / 010524458	£200,000,000	6 per cent. UK Treasury Gilt due 07 December 2028  (ISIN: GB0002404191)	235 bps	N/A
2033 Notes	Tesco PLC	XS0159013142 / 015901314	£200,000,000	4¼ per cent. UK Treasury Gilt due 07 June 2032 (ISIN: GB0004893086)	235 bps	N/A

*       For information purposes only, the Purchase Price in respect of the July 2019 Notes will, when determined in the manner described in the Tender Offer Memorandum on the basis of a Settlement Date of 30 October 2017, be 102.464 per cent. Should the Settlement Date in respect of any July 2019 Notes accepted for purchase pursuant to the relevant Offer differ from 30 October 2017, the Purchase Price in respect of the July 2019 Notes will be recalculated, all as further described in the Tender Offer Memorandum.

Rationale for the Offers

The Offers are being made in the context of Tesco's continuing efforts to strengthen the balance sheet and are aimed at efficiently using surplus liquidity to reduce gross debt.

Each Offeror intends to cancel any Notes purchased by it pursuant to the relevant Offer(s).

Purchase Prices and Accrued Interest

In respect of each Series, TCTS (in the case of the July 2019 Notes) or Tesco (in the case of each Series other than the July 2019 Notes) will pay for any Notes of the relevant Series validly tendered and accepted for purchase by such Offeror pursuant to the relevant Offer a purchase price for such Notes (each a Purchase Price) to be determined:

(i)            in the case of the July 2019 Notes, in the manner described in the Tender Offer Memorandum by reference to a fixed purchase yield of -0.10 per cent. (the July 2019 Notes Purchase Yield); or

(ii)           in the case of each Series other than the July 2019 Notes, at or around 1.00 p.m. (London time) on 25 October 2017 (the Pricing Time) in the manner described in the Tender Offer Memorandum by reference to the sum (annualised in the case of each such Series except the 2057 Notes) (each such sum, together with the July 2019 Notes Purchase Yield, a Purchase Yield) of:

(a)           the relevant Purchase Spread specified in the table above; and

(b)           the relevant Benchmark Security Rate.

Each Purchase Price will be determined in accordance with market convention and expressed as a percentage of the nominal amount of the Notes of the relevant Series accepted for purchase pursuant to the relevant Offer (rounded to the nearest 0.001 per cent., with 0.0005 per cent. rounded upwards), and is intended to reflect a yield to maturity of the Notes of the relevant Series on the Settlement Date based on the relevant Purchase Yield.

The relevant Offeror will also pay an Accrued Interest Payment in respect of any Notes accepted for purchase pursuant to the relevant Offer(s).

2042 Notes and 2057 Notes Acceptance Amount

If Tesco decides to accept valid tenders of any 2042 Notes or 2057 Notes for purchase pursuant to the relevant Offer, it will accept for purchase all of the 2042 Notes or 2057 Notes, as applicable, that are validly tendered, with no pro rata scaling (the aggregate nominal amount of such validly tendered and accepted 2042 Notes and 2057 Notes being the 2042 Notes and 2057 Notes Acceptance Amount).

July 2019 Notes, December 2019 Notes, 2023 Notes, 2029 Notes and 2033 Notes Acceptance Amounts and Scaling

In respect of each of the July 2019 Notes, the December 2019 Notes, the 2023 Notes, the 2029 Notes and the 2033 Notes, if the Offerors decide to accept any valid tenders of Notes of any such Series for purchase pursuant to the relevant Offer(s), the Offerors propose that the aggregate nominal amount of such Notes (if any) which they will accept for purchase pursuant to the relevant Offer(s), converted (where applicable) into Sterling at the Applicable Exchange Rate, will be up to an amount of up to (a) £700,000,000 less (b) the 2042 Notes and 2057 Notes Acceptance Amount, although the Offerors reserve the right, in their sole discretion, to accept significantly more or significantly less than (or none of) such amount of Notes of such Series, or to accept none of such Notes, for purchase pursuant to the relevant Offer(s) (the final aggregate nominal amount of such Notes accepted for purchase pursuant to such Offers, converted (where applicable) into Sterling at the Applicable Exchange Rate, being the Capped Offers Aggregate Acceptance Amount). 

The Offerors will determine the allocation of the Capped Offers Aggregate Acceptance Amount between each Series of the July 2019 Notes, the December 2019 Notes, the 2023 Notes, the 2029 Notes and the 2033 Notes in their absolute discretion, and reserve the right to accept significantly more or significantly less (or none) of any such Series as compared to the other such Series (the final aggregate nominal amount of any such Series accepted for purchase pursuant to the relevant Offer being a Capped Offer Series Acceptance Amount).

In respect of each of the July 2019 Notes, the December 2019 Notes, the 2023 Notes, the 2029 Notes and the 2033 Notes, if the relevant Offeror decides to accept any validly tendered Notes of such Series for purchase pursuant to the relevant Offer and the aggregate nominal amount of the relevant Series validly tendered is greater than the relevant Capped Offer Series Acceptance Amount, the relevant Offeror intends to accept such Notes for purchase on a pro rata basis such that the aggregate nominal amount of such Series accepted for purchase pursuant to the relevant Offer is no greater than such Capped Offer Series Acceptance Amount, as further set out in the Tender Offer Memorandum.

Tender Instructions

In order to participate in, and be eligible to receive the relevant Purchase Price and Accrued Interest Payment pursuant to the relevant Offer, Noteholders must validly tender their Notes by delivering, or arranging to have delivered on their behalf, a valid Tender Instruction that is received by the Information and Tender Agent by 5.00 p.m. (London time) on 24 October 2017 (the Expiration Deadline).  

Tender Instructions will be irrevocable except in the limited circumstances described in the Tender Offer Memorandum.

Tender Instructions must be submitted in respect of a minimum nominal amount of Notes of the relevant Series of no less than the minimum denomination for such Series, being £1,000 in respect of the December 2019 Notes, the 2029 Notes and the 2033 Notes, £50,000 in respect of the 2023 Notes, the 2042 Notes and the 2057 Notes, and €100,000 in respect of the July 2019 Notes, and may thereafter be submitted in integral multiples of £1,000 in respect of the December 2019 Notes, the 2023 Notes, the 2029 Notes, the 2033 Notes and the 2042 Notes, €1,000 in respect of the July 2019 Notes or £50,000 in respect of the 2057 Notes, as applicable.  A separate Tender Instruction must be completed on behalf of each beneficial owner and in respect of each Series.

Indicative Timetable for the Offers

Events	Times and Dates (All times are London time)
Commencement of the Offers Offers announced.  Tender Offer Memorandum available from the Information and Tender Agent.	Monday, 16 October 2017
Expiration Deadline Final deadline for receipt of valid Tender Instructions by the Information and Tender Agent in order for Noteholders to be able to participate in the Offers.	5.00 p.m. on Tuesday, 24 October 2017
Announcement of Indicative Results
Announcement by each of the Offerors of a non-binding indication of the levels at which they expect to set the 2042 Notes and 2057 Notes Acceptance Amount, the Capped Offers Aggregate Acceptance Amount and each Capped Offer Series Acceptance Amount, and indicative details of any Scaling Factor applicable to valid tenders of Notes of each relevant Series that will be applied in the event that each of the Offerors or one of the Offerors, as the case may be, decides to accept valid tenders of Notes of such Series pursuant to the relevant Offers.	Prior to the Pricing Time on Wednesday, 25 October 2017
Pricing Time
Determination of each Benchmark Security Rate, each Purchase Yield (other than the July 2019 Notes Purchase Yield) and each Purchase Price.	At or around 1.00 p.m. on Wednesday, 25 October 2017
Announcement of Results and Pricing Announcement of whether either or both of the Offerors will accept valid tenders of Notes pursuant to all or any of the applicable Offers and, if so accepted, the aggregate nominal amount of Notes of each Series so accepted for purchase, each Purchase Yield, each Benchmark Security Rate, the Applicable Exchange Rate and any Scaling Factors that will be applied to Notes of any Series.	As soon as reasonably practicable after the Pricing Time on Wednesday, 25 October 2017
Settlement Date Expected Settlement Date for the Offers.	Monday, 30 October 2017

Each Offeror may, in its sole discretion, extend, re-open, amend, waive any condition of or terminate any Offer made by it at any time (subject to applicable law and as provided in the Tender Offer Memorandum) and the above times and dates are subject to the right of each Offeror to so extend, re-open, amend and/or terminate any such Offer.

Noteholders are advised to check with any bank, securities broker or other intermediary through which they hold Notes when such intermediary would need to receive instructions from a Noteholder in order for that Noteholder to be able to participate in, or (in the limited circumstances in which revocation is permitted) revoke their instruction to participate in, an Offer before the deadlines set out above.  The deadlines set by any such intermediary and each Clearing System for the submission and (where permitted) withdrawal of Tender Instructions will be earlier than the relevant deadlines set out above and in the Tender Offer Memorandum.

Unless stated otherwise, announcements in connection with the Offers will be made (i) by publication through RNS and (ii) by the delivery of notices to the Clearing Systems for communication to Direct Participants.  Such announcements may also be found on the relevant Reuters Insider Screen and be made by the issue of a press release to a Notifying News Service.  Copies of all such announcements, press releases and notices can also be obtained upon request from the Information and Tender Agent, the contact details for which are below.  Significant delays may be experienced where notices are delivered to the Clearing Systems and Noteholders are urged to contact the Information and Tender Agent for the relevant announcements during the course of the Offers.  In addition, Noteholders may contact the Dealer Managers for information using the contact details below.

Noteholders are advised to read carefully the Tender Offer Memorandum for full details of, and information on the procedures for, participating in the Offers.

Questions and requests for assistance in connection with (i) the Offers may be directed to the Dealer Managers, and (ii) the delivery of Tender Instructions may be directed to the Information and Tender Agent, the contact details for each of which are set out below.

BNP Paribas (Telephone: [phone]; Attention: Liability Management Group; Email: [e-mail]), Commerzbank Aktiengesellschaft (Telephone: [phone]; Attention: Liability Management; Email: [e-mail]) and Lloyds Bank plc (Telephone: [phone]; Attention: Liability Management; Email: [e-mail]) are acting as Dealer Managers for the Offers.

Lucid Issuer Services Limited (Telephone: + 44 20 7704 0880; Attention: David Shilson; Email: [e-mail]) is acting as Information and Information and Tender Agent for the Offers.

This announcement is released by Tesco PLC and Tesco Corporate Treasury Services PLC and contains information that qualified or may have qualified as inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 (MAR), encompassing information relating to the Offers described above. For the purposes of MAR and Article 2 of Commission Implementing Regulation (EU) 2016/1055, this announcement is made by Robert Welch, Group Company Secretary at Tesco PLC.

LEI Number: 2138002P5RNKC5W2JZ46

DISCLAIMER This announcement must be read in conjunction with the Tender Offer Memorandum. This announcement and the Tender Offer Memorandum contain important information which should be read carefully before any decision is made with respect to the Offers.  If any Noteholder is in any doubt as to the contents of the Tender Offer Memorandum or the action it should take, it is recommended to seek its own financial advice, including in respect of any tax consequences, from its broker, bank manager, solicitor, accountant or other independent financial, tax or legal adviser.  Any individual or company whose Notes are held on its behalf by a broker, dealer, bank, custodian, trust company or other nominee must contact such entity if it wishes to tender such Notes pursuant to the Offers. None of TCTS, Tesco, the Dealer Managers or the Information and Tender Agent or any of their respective directors, employees or affiliates makes any recommendation whether Noteholders should tender Notes pursuant to the Offers.

OFFER AND DISTRIBUTION RESTRICTIONS

The distribution of this announcement and/or the Tender Offer Memorandum in certain jurisdictions may be restricted by law.  Persons into whose possession this announcement and/or the Tender Offer Memorandum come(s) are required by each of the Offerors, the Dealer Managers and the Information and Tender Agent to inform themselves about, and to observe, any such restrictions.  Nothing in this announcement nor the Tender Offer Memorandum constitutes an offer to buy or a solicitation of an offer to sell the Notes (and tenders of Notes in the Offers will not be accepted from any Noteholders) in any circumstances in which such offer or solicitation is unlawful. In those jurisdictions where the securities, blue sky or other laws require an Offer to be made by a licensed broker or dealer and any Dealer Manager or any of the Dealer Managers' respective affiliates is such a licensed broker or dealer in any such jurisdiction, such Offer shall be deemed to be made by such Dealer Manager or such affiliate, as the case may be, on behalf of the relevant Offeror in such jurisdiction. 

United States. The Offers are not being made, and will not be made, directly or indirectly, in or into, or by use of the mails of, or by any means or instrumentality of interstate or foreign commerce of, or of any facilities of a national securities exchange of, the United States.  This includes, but is not limited to, facsimile transmission, electronic mail, telex, telephone, the internet and other forms of electronic communication.  The Notes may not be tendered in the Offers by any such use, means, instrumentality or facility from or within the United States or by persons located or resident in the United States.  Accordingly, copies of this announcement, the Tender Offer Memorandum and any other documents or materials relating to the Offers are not being, and must not be, directly or indirectly mailed or otherwise transmitted, distributed or forwarded (including, without limitation, by custodians, nominees or trustees) in or into the United States or to any persons located or resident in the United States.  Any purported tender of Notes in the Offers resulting directly or indirectly from a violation of these restrictions will be invalid and any purported tender of Notes made by a person located in the United States or any agent, fiduciary or other intermediary acting on a non-discretionary basis for a principal giving instructions from within the United States will be invalid and will not be accepted.

Each Noteholder participating in an Offer will represent that it is not located in the United States and is not participating in such Offer from the United States, or it is acting on a non-discretionary basis for a principal located outside the United States that is not giving an order to participate in such Offer from the United States. For the purposes of this and the above paragraph, United States means the United States of America, its territories and possessions (including Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands), any state of the United States of America and the District of Columbia.

Italy. None of the Offers, this announcement, the Tender Offer Memorandum or any other document or materials relating to the Offers have been or will be submitted to the clearance procedures of the Commissione Nazionale per le Società e la Borsa (CONSOB) pursuant to Italian laws and regulations. Each Offer is being carried out in Italy as an exempted offer pursuant to article 101-bis, paragraph 3-bis of the Legislative Decree No. 58 of 24 February 1998, as amended (the Financial Services Act) and article 35-bis, paragraph 4 of CONSOB Regulation No. 11971 of 14 May 1999, as amended. Noteholders or beneficial owners of the Notes that are located in Italy can tender Notes for purchase in the Offers through authorised persons (such as investment firms, banks or financial intermediaries permitted to conduct such activities in the Republic of Italy in accordance with the Financial Services Act, CONSOB Regulation No. 16190 of 29 October 2007, as amended from time to time, and Legislative Decree No. 385 of 1 September 1993, as amended) and in compliance with applicable laws and regulations or with requirements imposed by CONSOB or any other Italian authority.

United Kingdom. The communication of this announcement, the Tender Offer Memorandum and any other documents or materials relating to the Offers is not being made and such documents and/or materials have not been approved by an authorised person for the purposes of section 21 of the Financial Services and Markets Act 2000.  Accordingly, such documents and/or materials are not being distributed to, and must not be passed on to, the general public in the United Kingdom.  The communication of such documents and/or materials as a financial promotion is only being made to those persons in the United Kingdom falling within the definition of investment professionals (as defined in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the Financial Promotion Order)) or persons who are within Article 43 of the Financial Promotion Order, or any other persons to whom it may otherwise lawfully be made under the Financial Promotion Order.

France. The Offers are not being made, directly or indirectly, to the public in the Republic of France (France).  Neither this announcement, the Tender Offer Memorandum nor any other document or material relating to the Offers has been or shall be distributed to the public in France and only (i) providers of investment services relating to portfolio management for the account of third parties (personnes fournissant le service d'investissement de gestion de portefeuille pour compte de tiers) and/or (ii) qualified investors (investisseurs qualifiés), other than individuals, acting for their own account, all as defined in, and in accordance with, Articles L.411-1, L.411-2 and D.411-1 of the French Code monétaire et financier, are eligible to participate in the Offers.  Neither this announcement nor the Tender Offer Memorandum have been or will be submitted for clearance to or approved by the Autorité des Marchés Financiers.

Belgium. None of this announcement, the Tender Offer Memorandum and any other documents or materials relating to the Offers have been submitted to or will be submitted for approval or recognition to the Belgian Financial Services and Markets Authority (Autoriteit voor financiële diensten en markten / Autorité des services marchés financiers) and, accordingly, the Offers may not be made in Belgium by way of a public offering, as defined in Articles 3 and 6 of the Belgian Law of 1 April 2007 on public takeover bids as amended or replaced from time to time. Accordingly, the Offers may not be advertised and the Offers will not be extended, and none of this announcement, the Tender Offer Memorandum nor any other documents or materials relating to the Offers (including any memorandum, information circular, brochure or any similar documents) has been or shall be distributed or made available, directly or indirectly, to any person in Belgium other than "qualified investors" in the sense of Article 10 of the Belgian Law of 16 June 2006 on the public offer of placement instruments and the admission to trading of placement instruments on regulated markets, acting on their own account. Insofar as Belgium is concerned, this announcement and the Tender Offer Memorandum have been issued only for the personal use of the above qualified investors and exclusively for the purpose of the Offers. Accordingly, the information contained in this announcement and the Tender Offer Memorandum may not be used for any other purpose or disclosed to any other person in Belgium.

 

END

 

 

TENUNOWRBAARARA