Tesco plc Tender Offer

If anyone can translate this into simple terms, I'd be grateful.


Corporate action detail
Investment TESCO 6% SNR NTS 14/12/2029 GBP1000 '14'
Description Tender Shares
Notes Tesco plc have announced a Tender Offer to purchase up to GBP500,000,000 of certain series of Notes, less the sum of the pounds sterling equivalent of the aggregate nominal amount (if any) of notes accepted for purchase pursuant to the separate 2047 Notes offer, and pursuant to the separate US tender offer amount.

Under the terms of the offer, tenders for holders of 6 percent 2029 Notes must be submitted in respect of a minimum of GBP1,000 and integral multiples of GBP1,000 in excess thereof .

Purchase Price:

In respect of each series of notes, the company will pay for any notes of the relevant series validly tendered and accepted for purchase by the company pursuant to the relevant offer a purchase price for such notes by reference to the sum of:

(i) the relevant purchase spread and
(ii) the relevant benchmark security rate

The final purchase price will be determined at or around 13:00 on 3 July 2017. For full details of the way in which the purchase price will be calculated, including the purchase spread and the benchmark security rate relevant to each series of notes, please see pages 1 and 2 of the Tender Offer Memorandum linked to below.

The final settlement date for the offer is expected to be on or around 6 July 2017. Accrued and unpaid interest on the Notes will be paid up to, but not including, the settlement date.

Please note that Notes tendered in the US tender offer and in the separate 2047 Notes offer will be purchased in priority to the series of notes under this offer. For full details of the offer purchase priority, please see pages 2 and 3 in the Tender Offer Memorandum linked to below.

The offer may also be subject to proration in the event that the maximum tender amount, as described above, is exceeded. For full details of the way in which the proration factor for each series of notes will be calculated, please see page 15 of the Tender Offer Memorandum linked to below.

To view the Tender Offer Memorandum in full please copy and paste the link below into your web browser:
https://sites.dfkingltd.com/TescoEUROFFER/Home/

Please note that you will be required to register on the above website to obtain a password to access the relevant documentation.

Comments

  • I got an email from YouInvest about this today. I hold ,TESCO 6% SNR NTS 14/12/2029. Haven't had time to consider it, yet.
  • I received the same email and holding Tesco 2033 5.5% and still trying to decipher the jargon.
  • Graysilk, so is there a tender offer in relation to the Tesco 2033 5.5% ?

    Which I hold but I haven't received any emails about

    Thanks, DSC
  • DSC, FYI

    Tesco plc have announced a Tender Offer to purchase up to GBP500,000,000 of certain series of Notes, less the sum of the pounds sterling equivalent of the aggregate nominal amount (if any) of notes accepted for purchase pursuant to the separate 2047 Notes offer, and pursuant to the separate US tender offer amount.

    Under the terms of the offer, tenders for holders of 5.5 percent 2033 Notes must be submitted in respect of a minimum of GBP1,000 and integral multiples of GBP1,000 in excess thereof .

    Purchase Price:

    In respect of each series of notes, the company will pay for any notes of the relevant series validly tendered and accepted for purchase by the company pursuant to the relevant offer a purchase price for such notes by reference to the sum of:

    (i) the relevant purchase spread and
    (ii) the relevant benchmark security rate

    The final purchase price will be determined at or around 13:00 on 3 July 2017. For full details of the way in which the purchase price will be calculated, including the purchase spread and the benchmark security rate relevant to each series of notes, please see pages 1 and 2 of the Tender Offer Memorandum linked to below.

    The final settlement date for the offer is expected to be on or around 6 July 2017. Accrued and unpaid interest on the Notes will be paid up to, but not including, the settlement date.

    Please note that Notes tendered in the US tender offer and in the separate 2047 Notes offer will be purchased in priority to the series of notes under this offer. For full details of the offer purchase priority, please see pages 2 and 3 in the Tender Offer Memorandum linked to below.

    The offer may also be subject to proration in the event that the maximum tender amount, as described above, is exceeded. . For full details of the way in which the proration factor for each series of notes will be calculated, please see page 15 of the Tender Offer Memorandum linked to below.

    To view the Tender Offer Memorandum in full please copy and paste the link below into your web browser:
    https://sites.dfkingltd.com/TescoEUROFFER/Home/
  • Notes: 2029 Notes, Benchmark; 6 per cent. UK Treasury Gilt due 07 December 2028; Purchase Spread:280 bps

    Notes: 2033 Notes, Benchmark; 4¼ per cent. UK Treasury Gilt due 07 June 2032;
    Purchase Spread:290 bps


    Purchase Prices and Accrued Interest
    In respect of each Series, the Company will pay for any Notes of the relevant Series validly tendered and accepted for purchase by the Company pursuant to the relevant Offer a purchase price for such Notes (each a Purchase Price) to be determined at or around 1.00 p.m. (London time) on 3 July 2017 (the Pricing Time) in the manner described in this Tender Offer Memorandum by reference to the sum (annualised in the case of all Series except the 2047 Notes) (each such sum, a Purchase Yield) of:
    (i) the relevant Purchase Spread specified in the table on page 1; and
    (ii) in the case of (a) the 2029 Notes, the 2033 Notes, the 2042 Notes and the 2057 Notes, the relevant Benchmark Security Rate or (b) the 2047 Notes, the 2047 Notes Interpolated Mid-Swap 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), .....
    The Company will also pay an Accrued Interest Payment in respect of any Notes accepted for purchase pursuant to the relevant Offer(s)
    ....

    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 4.00 p.m. (London time) on 30 June 2017 (the Expiration Deadline).
  • YouInvest deadline ***BEFORE 26 Jun, ie today***, I reckon the tender is a healthy premium to the current price, was thinking of selling anyway, so I have elected to allocate all my holding for tender, ( I just got them in-in time).
  • so does this mean that the offer is likely to be equivalent to the price of the relevant gilt, i.e. in the case of the 5.5% 2033, the 4.25% Gilt due 07 June 2032?

    which would work out around 138 ...
  • No, you need to do yield calculations, assuming you know how to calculate the yield of a bond, then.
    1. Calculate the yield on the benchmark
    2. Add the spread
    3. This is the yield on the TESCO bond that they propose to buy back ( the lower the yield the higher the price )
    4. Convert the tender yield to a price to get the tender price.
    5. The actual tender price is worked out at a future time based on the yield of the benchmark at the future time.

    I'm busy today so I don't have time to do the calcs for anyone else, in my circumstances, the bid looked similar/ bit higher than the current offer price on the screen.
    Disclaimer : Do your own research.
  • Ps. I had £110k nominal with YouInvest, got an email from them, have £5k with HL, got no email from HL, so I will keep the HL holding.
  • Thanks Paddy, thought 138 was a bit generous

    Reckon I'll hold onto mine - perhaps because I'm having enough trouble finding sensible places to invest cash as it is, without having a chunk returned ...
  • Tesco seem to be heading in the right direction credit wise, you should do the calculations anyway.
    https://www.fixedincomeinvestor.co.uk/x/yieldcalc.html
    (ignore Running Yield)
    or
    https://powertools.fidelity.com/fixedincome/yield.do

    FYI:
    a lot of people worry about interest risk on this forum, but the biggest risk is credit default,
    having said that 2033 is a 'long duration' bond so the change in price for 0.01% (basis point) change in yield is relatively high, you can play with the calculators to change the yield and calculate a new price.
  • Just got an email from HL about my £5k holding of 6% 2029, giving me a Monday morning deadline to accept the tender. ...the benchmark gilt has sold off about 2 points in recent days, so I will think about it.
  • Looks like Tesco don't want my 6% 2029 after all, this is the announcement:

    Indicative Final Priority 1 Notes Acceptance Amount and Indicative Series Acceptance Amount in respect of the 2047 Notes The Company announces that, in the event that the Company decides to accept valid tenders of 2047 Notes pursuant to the relevant Offer:
    (a) it expects to set the Final Priority 1 Notes Acceptance Amount at approximately £214,324,989; and
    (b) based on the applicable euro/Sterling exchange rate prevailing at the Expiration Deadline it expects to set the Series Acceptance Amount in respect of the 2047 Notes at approximately €244,009,000 and, therefore, it expects to accept for purchase all 2047 Notes validly tendered pursuant to the relevant Offer in full, with no pro rata scaling. Noteholders should note that this is a non-binding indication of the levels at which the Company expects to set the Final Priority 1 Notes Acceptance Amount and the Series Acceptance Amount in respect of the 2047 Notes.

    Indicative Final Priority 2 Notes Acceptance Amount and Indicative Series Acceptance Amounts in respect of each of the 2029 Notes, the 2033 Notes, the 2042 Notes and the 2057 Notes The Company further announces that, in the event that the Company decides to accept any valid tenders of 2029 Notes, 2033 Notes, 2042 Notes and/or 2057 Notes pursuant to the Offers:
    (a) it expects to set the Final Priority 2 Notes Acceptance Amount at approximately £54,650,000;
    *****(b) it expects to set the Series Acceptance Amount in respect of the 2029 Notes at £0 and, therefore, it does not expect to accept any 2029 Notes tendered pursuant to the relevant Offer;
    (c) it expects to set the Series Acceptance Amount in respect of the 2033 Notes at £0 and, therefore, it does not expect to accept any 2033 Notes tendered pursuant to the relevant Offer
  • I did not get time to consider it in the end and like you, I held the 2029 ones, so would not have got to sell them. What kind of bonus were they offering on the bonds prior to this announcement? I never did manage to translate the document.
  • It was a waste of time, because in the end Tesco did not buy back any 2029 bonds, it would have been a modest premium on the current offer price, so not even that generous.
  • New Tender , for me :
    Tesco PLC 6 per cent. 2029, Tender spread 235 bps, I have accepted.
  • What does that represent? 2.35% over the mid point? Current price shows as 120.25-122.5
  • I reckon they are bidding the offer price, but as per last time they may not actually buy them back.
    Treasury 6% 2028 (TR28) Gilt Benchmark Yield= 1.323
    =>Tender Yield =3.673
    Using
    https://www.fixedincomeinvestor.co.uk/x/yieldcalc.html
    gives a tender price = 122.48

  • Cannot fathom why an issuer wants to buy back debt at current levels. Surely, with 10 yr gilts at 1.3%, inflation more than double and Brexit perhaps soon ending up with WTO, why would you not rather be a seller, especially in view of BoE eventually needing to divest itself of some of its huge bond holdings?
  • It's probably due to some accounting motivation, I reckon they can fund short term at lower levels.
  • Tesco still don't want my 6%2029 bonds ,
    LONDON (Alliance News) - Tesco PLC Wednesday set out its indicative results of its tender offer for its EUR1.25 billion 1.375% notes due 2019, and for its tender offer for tranches of sterling denominated notes.

    Earlier this month the supermarket chain launched a tender offer for its outstanding EUR1.25 billion 1.375% notes due 2019, and separately for its GBP350.0 million 5.50% notes due 2019, GBP515.0 million 5% notes due 2023, GBP200.0 million 6% notes due 2029, GBP200.0 million 5.50% notes due 2033, GBP300.0 million 4.875% notes due 2042, and GBP500.0 million 5.20 % notes due 2057.

    These offers expired Tuesday.

    For the 2019 notes it saw an indicative acceptance amount of EUR318.8 million, for the 2019 notes GBP169.2 million, for the 2023 notes GBP150.9 million, for the 2029 notes GBP41.4 million and for the 2033 notes GBP24.5 million.

    Based on the 2019 euro notes at current exchange rates, the combined total in sterling amounts to GBP669.9 million.

    Tesco noted that, in regards to the 2042 and 2057 notes, if it decides to accept all of the notes validly tendered, the acceptance amount for these two classes of notes would be around GBP128.2 million - pushing the total up to GBP798.1 million.

    Tesco expects, therefore, to increase the aggregate nominal amount of notes accepted for purchase pursuant to the offers to around GBP800.0 million from GBP700.0 million.

    Pricing for the offers will take place later Wednesday.

    Shares in Tesco were down 0.6% at 185.75 pence Wednesday.

    By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
  • Might have sold some..
    https://www.investegate.co.uk/tesco-plc--tsco-/rns/final-result-of-tender-offer/201710251446096173U/

    A summary of the final pricing for, and results of, the Offers appears below:



    Aggregate Nominal Amount Accepted for Purchase

    Scaling Factor

    Benchmark Security Rate

    Purchase Spread

    Purchase Yield

    Purchase Price


    2042 Notes

    £71,171,000

    Not Applicable

    1.969 per cent.

    245 bps

    4.468 per cent.

    105.951 per cent.


    2057 Notes

    £57,000,000

    Not Applicable

    1.809 per cent.

    285 bps

    4.659 per cent.

    109.709 per cent.


    July 2019 Notes

    €318,771,000

    46.746

    Not Applicable

    Not Applicable

    -0.10 per cent.

    102.464 per cent.


    December 2019 Notes

    £169,233,000

    Not Applicable

    0.459 per cent.

    65 bps

    1.112 per cent.

    109.143 per cent.


    2023 Notes

    £150,925,000

    Not Applicable

    0.969 per cent.

    140 bps

    2.383 per cent.

    113.094 per cent.


    2029 Notes

    £41,368,000

    Not Applicable

    1.456 per cent.

    235 bps

    3.842 per cent.

    120.590 per cent.


    2033 Notes

    £24,472,000

    Not Applicable

    1.732 per cent.

    235 bps

    4.124 per cent.

    115.304 per cent.



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