TIDMLLOY
RNS Number : 7378G
Lloyds Banking Group PLC
24 November 2015
News Release
23 November 2015
NOT FOR DISTRIBUTION IN ANY JURISDICTION WHERE TO DO SO WOULD
CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH
JURISDICTION. THE EXCHANGE OFFER IS AVAILABLE only TO (1) QUALIFIED
INSTITUTIONAL BUYERS in a private transaction in reliance upon the
exemption from the registration requirements of the Securities Act
provided by Section 4(a)(2) thereof and (2) outside the United
States, to persons other than "U.S. persons" as defined in Rule 902
under the Securities Act in offshore transactions in compliance
with Regulation S under the Securities Act. THE EXCHANGE OFFER IS
MADE SUBJECT TO OFFER RESTRICTIONS IN CERTAIN JURISDICTIONS (SEE
"OFFER RESTRICTIONS" BELOW).
LLOYDS BANKING GROUP PLC COMMENCES AN EXCHANGE OFFER FOR CERTAIN
SUBORDINATED DEBT SECURITIES
Further to the announcement earlier today, Lloyds Banking Group
plc ("LBG") has now commenced an offer to certain eligible holders
to exchange specified series of outstanding subordinated debt
securities issued by HBOS plc and Lloyds Bank plc, wholly-owned
subsidiaries of LBG, for LBG's Tier 2 subordinated debt securities
set out in the table below (the "Exchange Offer"). Earlier today,
LBG also launched an offering for cash of new Tier 2 subordinated
debt securities.
The Exchange Offer provides LBG with an opportunity to further
enhance the quality of its capital base.
Exchange Offer
The Exchange Offer is being made on the terms and subject to the
conditions set out in the Exchange Offer Memorandum dated 23
November 2015 (the "Exchange Offer Memorandum"). Capitalized terms
not otherwise defined in this announcement have the same meaning as
in the Exchange Offer Memorandum.
The Exchange Offer consists of:
-- an offer to exchange 6.50% Fixed Rate Lower Tier 2 Notes due
2020 issued by Lloyds Bank plc and guaranteed by LBG (the "2020 Old
Notes") for Subordinated Debt Securities due 2025 issued by LBG
(the "2025 New Notes") (the "2025 Exchange Offer"); and
-- an offer to exchange 6.00% Subordinated Notes due 2033 issued
by HBOS plc (the "2033 Old Notes") for 5.300% Subordinated Debt
Securities due 2045 (the "2045 New Notes") issued by LBG (the "2045
Exchange Offer").
The 2020 Old Notes and the 2033 Old Notes are together referred
to as the "Old Notes". The 2025 New Notes and the 2045 New Notes
are together referred to as the "New Notes".
The table below sets forth certain information relating to the
2025 Exchange Offer:
Hypothetical
Total Hypothetical
Principal Reference Bloomberg 2020 Old Notes 2025 New Notes Early Exchange Exchange
Amount Treasury Reference Fixed Spread Fixed Spread Participation Consideration Consideration
Old Notes CUSIP Outstanding Security Page (basis points) (basis points) Payment(1) (1)(2)(3) (1)(2)(3)(4)
------------ ---------- -------------- ---------- --------- -------------- -------------- ------------- ------------- -------------
Lloyds Bank
plc 6.50%
Fixed Rate
Lower Tier 1.375% due
2 Notes due 53947NAA2 31 October
2020 53947QAA5 $2,000,000,000 2020 PX1 100 235 $50 $1,170.56 $1,120.56
(1) Per $1,000 principal amount of 2020 Old Notes accepted for exchange.
(2) The Exchange Consideration for each $1,000 principal amount
of 2020 Old Notes tendered after the Early Participation Date (as
defined below) but at or prior to the Expiration Deadline (as
defined below) will be 2025 New Notes in a principal amount equal
to the Total Exchange Consideration less the Early Participation
Payment.
(3) The Hypothetical Total Exchange Consideration is based on
the fixed spread for the 2020 Old Notes to the yield on the
Reference U.S. Treasury Security as of 11:00 a.m., New York City
time, on 20 November 2015. The information provided in the above
table is for illustrative purposes only. See Annex A to the
Exchange Offer Memorandum for the formula to be used to calculate
the Total Exchange Consideration.
(4) The Hypothetical Exchange Consideration is equal to the
Hypothetical Total Exchange Consideration less the Early
Participation Payment.
The table below sets forth certain information relating to the
2045 Exchange Offer:
Hypothetical Hypothetical
Total Hypothetical Hypothetical 2045 New
Principal Reference Bloomberg 2033 Old Notes 2045 New Notes Early Exchange Exchange 2045 New Notes
Amount Treasury Reference Fixed Spread Fixed Spread Participation Consideration Consideration Notes Exchange
Old Notes CUSIP Outstanding Security Page (basis points) (basis points) Payment(1) (1)(2)(3) (1)(2)(3)(5) Value(4)(6) Ratio(7)
------------------- ---------- ------------ ---------- --------- -------------- -------------- ------------- ------------- ------------- ------------ ------------
HBOS plc 6.00% 2.875% due
Subordinated Notes 4041A2AF1 15 August
due 2033 4041A3AG7 $750,000,000 2045 PX1 180 230 $50 $1,141.25 $1,091.25 $998.04 $1,143.49
(1) Per $1,000 principal amount of 2033 Old Notes accepted for exchange.
(2) The Exchange Consideration for each $1,000 principal amount
of 2033 Old Notes tendered after the Early Participation Date but
at or prior to the Expiration Deadline will be the Total Exchange
Consideration less the Early Participation Payment.
(3) The Hypothetical Total Exchange Consideration is based on
the fixed spread for the 2033 Old Notes to the yield on the
Reference U.S. Treasury Security as of 11:00 a.m., New York City
time, on 20 November 2015. The information provided in the above
table is for illustrative purposes only. See Annex A to the
Exchange Offer Memorandum for the formula to be used to calculate
the Total Exchange Consideration.
(4) Per $1,000 principal amount of 2045 New Notes.
(5) The Hypothetical Exchange Consideration is equal to the
Hypothetical Total Exchange Consideration less the Early
Participation Payment.
(6) The Hypothetical 2045 New Notes Value is shown for
illustrative purposes only and will be determined as of 11:00 a.m.,
New York City time, on 8 December 2015 in accordance with the
formula set forth in Annex A to the Exchange Offer Memorandum.
(7) The Hypothetical 2045 New Notes Exchange Ratio is equal to
(a) the Hypothetical Total Exchange Consideration, divided by (b)
the Hypothetical 2045 New Notes Value multiplied by (c) $1,000.
Such amount represents the aggregate principal amount of 2045 New
Notes a holder would receive for each $1,000 of 2033 Old Notes
tendered at or prior to the Early Participation Date.
Concurrent Private Offering
In conjunction with the Exchange Offer, LBG today also announced
an offering for cash of $500 million aggregate principal amount of
its 5.300% Subordinated Debt Securities due 2045, which are
expected to be issued on 1 December 2015 (the "2045 Original
Notes"). The 2045 New Notes offered in the Exchange Offer will
constitute a further issuance of, will form a single series with,
and have the same CUSIP numbers as the 2045 Original Notes.
Total Exchange Consideration; Exchange Consideration
Upon the terms and subject to the conditions set forth in the
Exchange Offer Memorandum, holders who validly tender and who do
not validly withdraw Old Notes at or prior to the Early
Participation Date, and whose tenders are accepted for exchange by
LBG, will receive the applicable Total Exchange Consideration for
each $1,000 principal amount of Old Notes. The Exchange
Consideration for each $1,000 principal amount of Old Notes
tendered after the Early Participation Date but at or prior to the
Expiration Deadline will be the Total Exchange Consideration less
the applicable Early Participation Payment.
2025 Exchange Offer
The Total Exchange Consideration in the 2025 Exchange Offer is
based on the fixed spread for the 2020 Old Notes to the yield on
the applicable Reference U.S. Treasury Security as of 11:00 a.m.
New York City time, on 8 December 2015.
The 2025 New Notes will mature on 10 December 2025 and will bear
interest at a rate per annum (the "2025 Notes Coupon") equal to the
sum of (a) the bid-side yield on the 2.25% U.S. Treasury Security
due 15 November 2025 (the "2025 New Notes Reference Security"), as
calculated by the Dealer Managers in accordance with standard
market practice, that equates to the bid-side price of the 2025 New
Notes Reference Security, as of 11:00 a.m., New York City time, on
8 December 2015, as displayed on the Bloomberg Reference page PX1
(or any recognized quotation source selected by the Dealer Managers
if such quotation report is not available or manifestly erroneous)
plus (b) a fixed spread of 235 basis points, such sum rounded to
the third decimal place when expressed as a percentage.
2045 Exchange Offer
The Total Exchange Consideration in the 2045 Exchange Offer is
based on the fixed spread for the 2033 Old Notes to the yield on
the Reference U.S. Treasury Security for that series as of 11:00
a.m., New York City time, on 8 December 2015.
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