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BRITISH AMERICAN TOBACCO PLC - British American Tobacco Announces $2 billion Debt Tender Offer
2020/09/22 15:08:00Download PDF Stock report
British American Tobacco Announces $2 billion Debt Tender Offer
British American Tobacco p.l.c.
Incorporated in England and Wales
(Registration number: 03407696)
Short name: BATS
Share code: BTI
ISIN number: GB0002875804
('British American Tobacco p.l.c.' or 'the Company')
PRESS RELEASE
British American Tobacco Announces $2 billion Debt Tender Offer
London, United Kingdom; September 22, 2020 – British American Tobacco
p.l.c. (“BAT”) announces today that B.A.T Capital Corporation, a corporation
incorporated in the State of Delaware (“BATCAP”), B.A.T. International Finance
p.l.c., a public limited company incorporated under the laws of England and Wales
(“BATIF”), and Reynolds American Inc., a corporation incorporated in the State of
North Carolina (“RAI” and together with BATCAP and BATIF, the “Offerors”), wholly
owned subsidiaries of BAT, have commenced debt tender offers to purchase (the
“Tender Offer”) the debt securities listed in the table below (collectively, the
“Securities”), for an aggregate purchase price (excluding accrued and unpaid
interest) for all Offerors and all series of Securities of up to $2 billion in cash (as
such amount may be increased or decreased pursuant to the Offer to Purchase (as
defined below), the “Maximum Tender Amount”).
SECURITIES SUBJECT TO THE TENDER OFFER
Issuer of Fixed Hypothetical
Security / Principal Acceptance Early Bloomberg Spread Total Total
Applicable Title of Amount Priority Tender Reference Reference (basis Consideration Consideration
Offeror Security Outstanding CUSIP/ISIN Level Premium(1) Security Page/Screen points) (1)(2)(4) (1)(2)(4)(5)
Sub-Cap(6)
BATIF ........ 3.500% $500,000,000 05530QAL4/ 1 $30 0.125% U.S. PX4 20 To be $1,053.17 N/A
Guaranteed US05530QAL41/ Treasury due determined as
Notes due G08820CJ2/ Aug 31, described
2022 USG08820CJ26 2022 herein
RAI ............. 3.250% Senior $158,484,000 761713AX4/ 2 $30 0.125% U.S. PX4 25 To be $1,058.84 N/A
Notes due US761713AX48 Treasury due determined as
2022 Aug 31, described
2022 herein
BATCAP .... 2.764% Notes $2,250,000,000 05526DAV7/ 3 $30 0.125% U.S. PX4 30 To be $1,041.01 N/A
due 2022 US05526DAV73 Treasury due determined as
Aug 31, described
2022 herein
BATIF 3.250% $900,000,000 05530QAF7/ 4 $30 0.125% U.S. PX4 30 To be $1,046.51 N/A
Guaranteed US05530QAF72/ Treasury due determined as
Notes due G08820BX2/ May 31, described
2022 USG08820BX29 2022 herein
RAI ............. 4.000% Senior $1,000,000,000 761713BF2/ 5 $30 1.750% U.S. PX4 30 To be $1,059.37 N/A
Notes due US761713BF23 Treasury due determined as
Issuer of Fixed Hypothetical
Security / Principal Acceptance Early Bloomberg Spread Total Total
Applicable Title of Amount Priority Tender Reference Reference (basis Consideration Consideration
Offeror Security Outstanding CUSIP/ISIN Level Premium(1) Security Page/Screen points) (1)(2)(4) (1)(2)(4)(5)
Sub-Cap(6)
2022 June 15, described
2022 herein
BATIF ........ 6.000% £250,000,000 XS0436059843 6 £30 4.000% UK FIT GLT0-10 55 To be £1,095.38 $100 million
Guaranteed Treasury due determined as
Notes due March 7, described
2022 2022 herein
BATIF ........ 3.625% 600,000,000 XS0704178556 7 30 N/A N/A N/A 1,041.68(3) N/A $100 million
Guaranteed
Notes due
2021
(1) Per $1,000, £1,000 or 1,000, as applicable, principal amount of Securities validly tendered at or prior to the Early Tender Deadline and accepted for purchase.
(2) For the avoidance of doubt, the Early Tender Premium is included within the Total Consideration (which, in the case of all Securities, except for the 2021 Euro
BATIF Notes, will be calculated using the Fixed Spread over the relevant Reference Yield as described herein), and is not in addition to the Total Consideration.
(3) Assuming an Early Settlement Date of October 8, 2020, the Total Consideration for the 2021 Euro BATIF Notes represents a yield to the maturity date of the 2021
Euro BATIF Notes of -0.20%, and is equivalent to the value of all remaining payments of principal and interest on the 2021 Euro BATIF Notes to but excluding
the scheduled maturity date of the 2021 Euro BATIF Notes, discounted to the Early Settlement Date at a discount rate equal to -0.20%. The yield to the maturity
date corresponding to the Total Consideration for the 2021 Euro BATIF Notes would represent a lower (i.e., more negative) yield if the Early Settlement Date
were to be later than October 8, 2020. This information is provided for illustrative purposes only and should not be relied upon for any other purpose.
(4) Total Consideration will be determined by taking into account the par call date for the 2022 BATCAP Notes.
(5) Hypothetical Total Consideration as of 10:00 a.m., New York City time, on September 21, 2020 and assuming an Early Settlement Date of October 8, 2020.
(6) To determine whether the Maximum Tender Amount or any Sub-Cap has been reached, we will convert the applicable purchase price payable with respect to the
Sterling Securities and Euro Securities validly tendered into U.S. Dollars using the applicable exchange rate set forth under “The Terms of the Offer - Maximum
Tender Amount; Sub - Caps; Acceptance Priority Levels and Proration.” in the Offer to Purchase.
The amount of each series of Securities that is purchased will be determined
in accordance with the acceptance priority levels specified in the table above (the
“Acceptance Priority Level”), with 1 being the highest Acceptance Priority Level and
7 being the lowest Acceptance Priority Level, subject to the Maximum Tender
Amount and, with respect to the 2022 Sterling BATIF Notes, a maximum aggregate
purchase price of $100 million (excluding accrued and unpaid interest) (the “2022
Sterling BATIF Notes Sub-Cap”) and, with respect to the 2021 Euro BATIF Notes, a
maximum aggregate purchase price of $100 million (excluding accrued and unpaid
interest) (the “2021 Euro BATIF Notes Sub-Cap” and, together with the 2022
Sterling BATIF Notes Sub-Cap, the “Sub-Caps”).
The Tender Offer is being made upon and is subject to the terms and
conditions set forth in the Offer to Purchase, dated September 22, 2020, including
the Financing Condition (as defined below). The Tender Offer will expire at 11:59
p.m., New York City time, on October 20, 2020, unless extended or earlier
terminated (the “Expiration Date”). Tenders of Securities may be withdrawn at any
time at or prior to 5:00 p.m., New York City time, on October 5, 2020, but may not
be withdrawn thereafter, unless the Offerors are required by applicable law to
permit withdrawal.
As regards the Securities denominated in U.S. Dollars and Sterling, the
applicable Total Consideration or Tender Offer Consideration to be paid for each
series of Securities accepted for purchase will be determined at 10:00 a.m., New
York City time, on the business day following the Early Tender Deadline (as it may
be extended, the “Price Determination Date”), which is expected to be October 6,
2020. The applicable Total Consideration or Tender Offer Consideration to be paid
for the Securities denominated in U.S. Dollars and Sterling will be determined in the
manner described in the Offer to Purchase by reference to the applicable fixed
spread over the yield to maturity based on the bid side price of the applicable
Reference Security specified in the table above, and the Total Consideration or
Tender Offer Consideration to be paid for the Securities denominated in Euro will be
a fixed amount as set forth in the table above.
Holders of Securities who validly tender and not withdraw their Securities at
or prior to 5:00 p.m., New York City time, on October 5, 2020 (unless extended,
the “Early Tender Deadline”) and whose Securities are accepted for purchase will
receive the applicable Total Consideration, which includes the applicable early
tender premium specified in the table above (the “Early Tender Premium”). Holders
of Securities who validly tender their Securities following the Early Tender Deadline
and at or prior to the Expiration Date and whose Securities are accepted for
purchase will only receive the applicable “Tender Offer Consideration,” which is
equal to the applicable Total Consideration minus the applicable Early Tender
Premium.
The applicable Total Consideration or Tender Offer Consideration for
Securities denominated in U.S. Dollars, Sterling and Euro will be paid in U.S.
Dollars, Sterling and Euro, respectively. Acceptance of Notes with reference to the
Maximum Tender Amount and each Sub-Cap will be determined subject to the
currency conversion methods described in the Offer to Purchase.
In addition to the applicable Total Consideration or Tender Offer
Consideration, as the case may be, accrued and unpaid interest from and including
the most recent interest payment date applicable to the relevant series of Securities
up to, but not including, the applicable Settlement Date will be paid in cash on all
validly tendered Securities accepted for purchase.
Even if the Maximum Tender Amount is not reached as of the Early Tender
Deadline, subject to the Sub-Caps, Securities validly tendered and not validly
withdrawn at or prior to the Early Tender Deadline will be accepted for purchase in
priority to Securities tendered following the Early Tender Deadline even if such
Securities tendered following the Early Tender Deadline have a higher Acceptance
Priority Level than Securities tendered at or prior to the Early Tender Deadline.
Securities of a series may be subject to proration if the aggregate principal
amount of the Securities of such series validly tendered and not validly withdrawn
would cause the Maximum Tender Amount or any applicable Sub-Cap to be
exceeded. Furthermore, if the Maximum Tender Amount is reached as of the Early
Tender Deadline, holders who validly tender Securities following the Early Tender
Deadline will not have any of their Securities accepted for purchase unless the
Maximum Tender Amount is increased. If the relevant Sub-Cap is reached as of the
Early Tender Deadline, holders who validly tender 2022 Sterling BATIF Notes or
2021 Euro BATIF Notes following the Early Tender Deadline will not have any such
Securities accepted for purchase unless the applicable Sub-Cap is increased.
Each Offeror’s obligation to accept for payment and pay for the Securities
validly tendered in the Tender Offer is subject to the satisfaction or waiver of the
conditions described in the Offer to Purchase, including (i) the completion by
BATCAP and BATIF prior to the Early Settlement Date (which is expected to be
October 8, 2020) or the Expiration Date, as applicable, of one or more offerings of
debt securities that result in aggregate net proceeds of at least $2 billion, on terms
and subject to conditions satisfactory to the Offerors in their sole discretion, and (ii)
the Offerors having available funds sufficient to pay (x) the applicable Total
Consideration or the applicable Tender Offer Consideration, and the applicable
accrued but unpaid interest, with respect to validly tendered Securities for an
aggregate purchase price of up to the Maximum Tender Amount, and (y) all fees
and expenses related to the Tender Offer (collectively, the “Financing Condition”).
The Offer is being undertaken to optimize BAT Group’s debt capital structure.
Securities that are accepted in the Offer will be purchased by the applicable Offeror
and retired and canceled and will no longer remain outstanding obligations of the
applicable Offeror.
Payment for Securities that are validly tendered and not validly withdrawn at
or prior to the Early Tender Deadline and accepted for purchase will be made as
soon as reasonably practicable following the Early Tender Deadline (such date, the
“Early Settlement Date”). The Offerors expect that the Early Settlement Date will be
October 8, 2020, the second business day after the Price Determination Date.
Payment for Securities that are validly tendered following the Early Tender Deadline
but at or prior to the Expiration Date and accepted for purchase will be made
promptly following the Expiration Date (such date, the “Final Settlement Date”).
The Offerors expect that the Final Settlement Date will be October 22, 2020, the
second business day after the Expiration Date, assuming the Maximum Tender
Amount of Securities is not purchased on the Early Settlement Date.
The Tender Offer may be amended, extended, terminated or withdrawn in
whole or with respect to any series of Securities without amending, extending,
terminating or withdrawing the Offer with respect to any other series of Securities.
The Tender Offer is not conditioned on any minimum amount of Securities being
tendered. The Offerors reserve the right, subject to applicable law, to: (i) waive any
and all conditions to the Offer; (ii) extend or terminate the Offer; (iii) increase or
decrease the Maximum Tender Amount or any Sub-Cap; or (iv) otherwise amend
the Tender Offer in any respect.
BofA Securities, Deutsche Bank Securities and Goldman Sachs & Co. LLC are
acting as the dealer managers for the Tender Offer. The information and tender
agent is Global Bondholder Services Corporation. Copies of the Offer to Purchase
and related offering materials are available via the Tender Offer website at
http://www.gbsc-usa.com/registration/bat/ or by contacting the information and
tender agent in New York at +1 (212) 430-3774 (banks and brokers) or +1 (866)
470-3900 (all others) or by email at contact@gbsc-usa.com. Questions regarding
the Tender Offer should be directed to BofA Securities at +44 20 7996 5420
(London) or +1 (888) 292 0070 (U.S. Toll Free) or by email at DG.LM-
EMEA@bofa.com, Deutsche Bank Securities at +44 20 7545 8011 (Europe) or +1
(866) 627-0391 (U.S. Toll Free) or Goldman Sachs & Co. LLC at +44-20-7552-
6157(Europe) or +1 (800) 828-3182 (U.S. Toll Free).
This announcement is for informational purposed only and shall not
constitute an offer to sell, a solicitation to buy or an offer to purchase or sell any
securities. The Tender Offer is being made only pursuant to the Offer to Purchase
and only in such jurisdictions as is permitted under applicable law. Please see the
Offer to Purchase for certain important information on offer restrictions applicable
to the Tender Offer.
Forward-Looking Statements
Statements included in this announcement and the Offer to Purchase regarding the
future expectations of BAT and its subsidiaries (the “BAT Group”), beliefs, plans, objectives,
financial conditions, assumptions or future events or performance that are not historical
facts are forward-looking statements. These statements are often, but not always, made
through the use of words or phrases such as “anticipate”, “believe”, “could”, “estimate”,
“expect”, “intend”, “may”, “outlook”, “plan”, “positioned”, “potential”, “predict”, “project”,
“should”, “strategy”, “target”, “will”, “would” and similar expressions. These include
statements regarding the BAT Group’s intentions, beliefs or current expectations
concerning, among other things, the BAT Group’s results of operations, financial condition,
liquidity, prospects, growth, strategies and the economic and business circumstances
occurring from time to time in the countries and markets in which the BAT Group operates.
All such forward-looking statements involve estimates and assumptions that are subject to
risks, uncertainties and other factors that could cause actual future financial condition,
performance and results to differ materially from the plans, goals, expectations and results
expressed in the forward-looking statements and other financial and/or statistical data
within this announcement. The BAT Group believes that the expectations reflected in this
document are reasonable, but they may be affected by a wide range of variables that could
cause actual results to differ materially from those currently anticipated. Among the key
factors that could have an adverse effect on the results of operations, cash flows and
financial position of the BAT Group and that could cause actual results to differ materially
from those projected in the forward-looking statements, are competitive actions and pricing
pressures in the marketplace, including competition from illicit sources, market size
reduction and consumer down-trading; limitations on advertising and marketing of tobacco
products; changes in tobacco-related, tax and other laws and regulations, the interpretation
of such laws and regulations by governmental authorities or adverse decisions by domestic
or international regulatory bodies; the outcome of pending or potential litigation, including
tobacco litigation, environmental litigation and personal injury claims and significant
monetary obligations imposed under outstanding settlement agreements; economic,
regulatory and geopolitical risks (including as a result of COVID-19) inherent in the BAT
Group’s global operations; risks relating to the ability to maintain credit ratings and to fund
the business under the current capital structure; risks relating to government regulations or
actions adversely affecting the BAT Group’s business, including the BAT Group becoming
subject to substantial and increasing U.S. regulations, in particular in relation to the nicotine
level or use of menthol in tobacco products, including by virtue of the BAT Group’s increased
ownership in RAI; the continuing decline in cigarette consumption, or the overall
consumption of legitimate tobacco products or the transition of adult tobacco consumers
away from premium cigarette brands; fluctuations in foreign exchange rates; potentially
significant costs in the event of breaches of, or liabilities arising under, health and safety
and environmental laws; the impact of serious injury, illness or death in the workplace;
liquidity, interest rate and counterparty risks; the inability to develop, commercialize and
deliver BAT Group’s vapor, modern oral and tobacco heating products strategy; and risks
related to other factors discussed or incorporated by reference in the Offer to Purchase,
including in the section captioned “Risks and Uncertainties” in the Half-Year Report and the
sections captioned “Principal Group Risks”, “Group Risk Factors” and “Recent Developments”
in the 2019 Form 20-F.
The forward-looking statements in this announcement speak only as of the date of
the document in which the forward-looking statement is made, and the Offerors undertake
no obligation to update or revise publicly any forward-looking statement, whether because
of new information, future events or otherwise, except as required by applicable law.
United Kingdom
The communication of this Offer to Purchase and any other documents or materials
relating to the Offer is not being made by, and such documents and/or materials have not
been approved, by an authorized person for the purposes of section 21 of the Financial
Services and Markets Act 2000, as amended. 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 persons in the United Kingdom falling within the definition of
investment professional (as defined in Article 19(5) of the Financial Services and Markets
Act 2000 (Financial Promotion) Order 2005, as amended (the “Financial Promotion Order”)),
or to those persons who are creditors or shareholders of any Offeror or other persons falling
within Article 43(2) of the Financial Promotion Order, or to any other persons to whom such
documents and/ or materials may otherwise lawfully be communicated under the Financial
Promotion Order.
Belgium
Neither this Offer to Purchase nor any other documents or materials relating to the
Offer have been submitted to or will be submitted for approval or recognition to the Belgian
Financial Services and Markets Authority (“Autorite des services et marches
financiers/Autoriteit voor Financiele Diensten en Marken”) and, accordingly, the Offer may
not be made in Belgium by way of a public offering, as defined in Articles 3(1)(1) and 3(6)
of the Belgian Law of 1 April 2007 on public takeover bids (the “Belgian Takeover Law”) or
as defined in Article 3 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
(together, the “Belgian Public Offer Law”), each as amended or replaced from time to time.
Accordingly, the Offer may not be advertised and the Offer will not be extended, and neither
this Offer to Purchase nor any other documents or materials relating to the Offer (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 (i) to “qualified investors” in the sense of Article 10 of the Belgian Public Offer Law (as
amended from time to time), acting on their own account, or (ii) in any circumstances set
out in Article 6(4) of the Belgian Takeover Law. Insofar as Belgium is concerned, this Offer
to Purchase has been issued only for the personal use of the above qualified investors and
exclusively for the purpose of the Offer. Accordingly, the information contained in this Offer
to Purchase may not be used for any other purpose or disclosed to any other person in
Belgium.
France
The Offer is not being made, directly or indirectly, to the public in the Republic of
France (France). Neither this Offer to Purchase nor any other document or material relating
to the Offer 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 qualifies), 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 to D.411-3 of the French Code monetaire et financier, are eligible to
participate in the Offer. This Offer to Purchase has not been and will not be submitted for
clearance to nor approved by the Autorite des Marches Financiers.
Italy
None of the Offer, this Offer to Purchase or any other document or materials relating
to the Offer have been or will be submitted to the clearance procedures of the Commissione
Nazionale per le Societa e la Borsa (CONSOB) pursuant to Italian laws and regulations. The
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 3 of CONSOB Regulation No. 11971 of
14 May 1999, as amended (the Regulation No. 11971). Accordingly, qualified investors (as
defined in Article 26, first paragraph, letter d) of CONSOB Regulation No. 16190 of 29
October 2007, as amended (the Regulation No. 16190), pursuant to Article 34-ter, first
paragraph, letter b) of Regulation No. 11971) who are Holders or beneficial owners of the
Securities that are located in Italy can tender Securities for purchase in the Offer through
authorized 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,
the Regulation No. 16190 and Legislative Decree No. 385 of September 1, 1993, as
amended) and in compliance with applicable laws and regulations or with requirements
imposed by CONSOB, the Bank of Italy or any other Italian authority.
Enquiries:
Investor Relations
Mike Nightingale/Victoria Buxton/William Houston/John Harney
+44 20 7845 1180/2012/1138/1263
Press Office
+44 (0) 20 7845 2888 (24 hours) | @BATPress
Sponsor: UBS South Africa (Pty) Ltd
Date: 22-09-2020 03:08:00
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