TIDMLLOY

RNS Number : 8784U

Lloyds Banking Group PLC

07 December 2021

DECEMBER 7, 2021

LLOYDS BANKING GROUP PLC ANNOUNCES PRICING TERMS FOR ITS EXCHANGE OFFER

Lloyds Banking Group plc ("LBG") today announced the pricing terms with respect to its offer to exchange Fixed Rate Reset Subordinated Debt Securities due 2046 with a call date in 2041 (the "New Notes"), to be issued by LBG, plus (if applicable) the relevant Cash Consideration Amount (as set out in the table below), plus accrued and unpaid dividends or interest (as the case may be) in cash, plus cash amounts in lieu of any fractional New Notes (if applicable), for:

   (1)   any and all of the outstanding American Depositary Shares ("ADSs") representing LBG's 6.413% Non-Cumulative Fixed to Floating Rate Preference Shares (the "Series 1 Preference Shares"), ADSs representing LBG's 6.657% Non-Cumulative Fixed to Floating Rate Preference Shares (the "Series 2 Preference Shares" and, collectively with the Series 1 Preference Shares, the "Preference Shares") and 6.00% Subordinated Notes due 2033 issued by HBOS plc (the "Series 1 Existing Subordinated Notes") (the "Any and All Offer"), and 

(2) up to the Cap Amount (as defined below) of LBG's 4.582% Subordinated Debt Securities due 2025 (the "Series 3 Existing Subordinated Notes") and LBG's 4.500% Fixed Rate Subordinated Debt Securities due 2024 (the "Series 2 Existing Subordinated Notes" and, collectively with the Series 1 Existing Subordinated Notes and the Series 3 Existing Subordinated Notes, the "Existing Subordinated Notes") (the "Capped Offer" and, together with the Any and All Offer, the "Exchange Offer").

The Series 1 Existing Subordinated Notes and the Preference Shares are collectively referred to as the "Any and All Offer Securities". The Series 2 Existing Subordinated Notes and the Series 3 Existing Subordinated Notes are collectively referred to as the "Capped Offer Notes". The Preference Shares and the Existing Subordinated Notes are collectively referred to as the "Existing Securities". The Exchange Offer is being made on the terms and subject to the conditions set out in the prospectus dated November 10, 2021, as it may be amended or supplemented from time to time (the "Prospectus"). Capitalized terms not otherwise defined in this announcement have the same meaning as assigned to them in the Prospectus.

For each $1,000 principal amount of Existing Securities validly tendered and not validly withdrawn prior to 11:59 p.m., New York City time, on December 9, 2021 (the "Expiration Deadline") and accepted by LBG, the following table sets forth the exchange yield, the Total Exchange Consideration (consisting of a principal amount of New Notes equal to the applicable New Notes Exchange Consideration plus an amount in cash equal to the relevant Cash Consideration Amount), New Notes Exchange Consideration and the Cash Consideration Amount.

 
                                                                                                                New Notes                       Total 
                                                                        Reference                   Exchange    Exchange         Cash         Exchange 
                                                            Exchange       UST       Fixed Spread    Yield    Consideration  Consideration  Consideration 
       Title of Security          Issuer    ISIN/CUSIP    Priority(1)    Security   (basis points)    (2)          (4)        Amount (4)       (3)(4) 
--------------------------------  -------  -------------  ------------  ----------  --------------  --------  -------------  -------------  ------------- 
Any and All Offer 
              144A: 
           US539439AC38 
           / 539439AC3 
              Reg S: 
           USG5533WAA56                1.250% U.S. Treasury Notes due August 15, 
   LBG     / G5533WAA5            N/A   2031                                                  +107    2.509%      $1,306.88                     $1,452.88 
ADSs representing 6.413% 
 Non-Cumulative Fixed to Floating Rate Preference Shares.......                                                                    $146.00 
                                               144A:                    1.750% 
                                            US539439AF68                 U.S. 
ADSs representing 6.657%                    / 539439AF6                  Treasury 
 Non-Cumulative Fixed to                       Reg S:                    Notes due 
 Floating Rate Preference                   US539439AE93                 August 
 Shares.......                      LBG     / 539439AE9       N/A        15, 2041              +83    2.699%      $1,386.95        $110.00      $1,496.95 
                                               144A: 
                                            US4041A2AF14                1.250% 
                                                 /                       U.S. 
                                             4041A2AF1                   Treasury 
                                               Reg S:                    Notes due 
6.00% Subordinated Notes due       HBOS     US4041A3AG79                 August 
 2033..........                     plc     / 4041A3AG7       N/A        15, 2031             +100    2.439%      $1,220.34        $145.00      $1,365.34 
Capped Offer 
4.500% Fixed Rate Subordinated      LBG    US53944YAA10        1        0.750%                 +50    1.447%      $1,086.06          $0.00      $1,086.06 
 Debt Securities due 2024....               / 53944YAA1                  U.S. 
                                                                         Treasury 
                                                                         Notes due 
                                                                         November 
                                                                         15, 2024 
4.582% Subordinated Debt            LBG    US539439AM10        2        1.125%                 +50    1.739%      $1,109.10          $0.00      $1,109.10 
 Securities due                             / 539439AM1                  U.S. 
 2025...........................                                         Treasury 
                                                                         Notes due 
                                                                         October 
                                                                         31, 2026 
 

(1) The aggregate principal amount of the Capped Offer Notes of each series that are accepted for exchange pursuant to the Capped Offer will be based on the order of Exchange Priority for such series as set forth in the table above, subject to the Cap Amount and proration arrangements applicable to the Capped Offer.

(2) Reflects the bid-side yield of the applicable Reference UST Security as of 10:00 a.m. New York City time on December 7, 2021, plus the applicable Fixed Spread, calculated in accordance with the procedures set forth in the Prospectus.

(3) In addition to the applicable Total Exchange Consideration, LBG will pay accrued and unpaid dividends (in the case of the Preference Shares) or interest (in the case of Existing Subordinated Notes) up to, but not including, the Settlement Date.

(4) Total Exchange Consideration and New Notes Exchange Consideration are per $1,000 principal amount of Existing Securities accepted for exchange pursuant to the Exchange Offer. The Total Exchange Consideration includes both the Cash Consideration Amount and the New Notes Exchange Consideration.

New Notes

 
 
                                New Notes     Spread         Optional 
  Title of        Benchmark     Interest    to Benchmark     Redemption    Maturity      Reset       Reset    Issue 
   Series          Security      Rate(1)      Security          Date          Date       Coupon       Date     Price 
-------------  -------------  -----------  -------------  ---------------  ---------  ------------  --------  ------ 
3.369% Fixed 
 Rate Reset 
 Subordinated                                             From (and 
 Debt                                                     including) 
 Securities    1.750%                                     September 
 due 2046       U.S.                                      14, 2041 
 with           Treasury                                  to (and                        5-year 
 a call date    Notes due                                 including)                   US Treasury  December 
 in 2041        August                                    December         December       Rate         14, 
 ..........     15, 2041        3.369%       +150 bps     14, 2041          14, 2046     +1.50%       2041     100% 
 
 

(1) The New Notes Interest Rate is based on the bid-side yield of the Benchmark Security, as of 10:00 a.m. New York City time on December 7, 2021, plus the Spread to Benchmark Security, calculated in accordance with the procedures set forth in the Prospectus.

The aggregate principal amount of the Capped Offer Notes of each series that are accepted for exchange will be based on the order of Exchange Priority for such series as set forth in the table above, subject to the Cap Amount and proration arrangements applicable to the Capped Offer. The Cap Amount is a principal amount of Capped Offer Notes that would result in a principal amount of $750,000,000 of the New Notes (the "Maximum Capped Offer New Notes Size") being issued pursuant to the Exchange Offer (after taking into account the principal amount of the New Notes to be issued pursuant to the Any and All Offer). In case the principal amount of the Any and All Offer Securities accepted pursuant to the Any and All Offer is such that the principal amount of the New Notes to be issued pursuant to the Any and All Offer is equal to or exceeds $750,000,000, all validly tendered Any and All Offer Securities will be accepted in full and no Capped Offer Notes will be accepted pursuant to the Capped Offer.

In addition to the applicable Total Exchange Consideration specified in the table above, holders of Existing Securities that are accepted for exchange will receive a cash payment representing (i) the accrued and unpaid dividends (in the case of the Preference Shares) or interest (in the case of Existing Subordinated Notes) to, but not including, the Settlement Date, and (ii) amounts due in lieu of any fractional amounts of New Notes, in each case, as described in the Prospectus.

Minimum New Issue Size

The Exchange Offer is subject to a minimum new issue size of at least $500,000,000 in aggregate principal amount

of New Notes being issued in exchange for Existing Securities validly tendered pursuant to the Exchange Offer and

not withdrawn (the "Minimum New Issue Size") and certain other conditions set out under the heading "The

Exchange Offer-Terms of the Exchange Offer-Exchange Offer Conditions " in the Prospectus.

Indicative Timetable

The following table sets out the expected dates and times of the key events relating to the Exchange Offer. This is an indicative timetable and is subject to change.

 
                 Events                           Dates and Times 
---------------------------------------  -------------------------------- 
 Withdrawal Deadline 
 The deadline for holders to              11:59 p.m., New York City time, 
  validly withdraw tenders of              on December 9, 2021 
  Existing Securities. 
 Expiration Deadline 
 The deadline for receipt of              11:59 p.m., New York City time, 
  all Exchange Instructions.               on December 9 , 2021 
 Announcement of Exchange Offer 
  Results 
 Announcement of (i) the aggregate        December 10, 2021 
  principal amounts of each series 
  of Existing Securities which 
  LBG will be accepting for exchange; 
  (ii) in the case of the Capped 
  Offer, whether tenders of each 
  series of Capped Offer Securities 
  are to be accepted in full (if 
  at all) or on a pro rata basis 
  and, where accepted on a pro 
  rata basis, the extent to which 
  such tenders will be scaled; 
  (iii) the aggregate principal 
  amount of New Notes to be issued 
  in the Exchange Offer; and (iv) 
  the Settlement Date. 
 Settlement Date 
 Settlement Date of the Exchange          Expected on December 1 4 , 2021 
  Offer, including delivery of 
  the New Notes plus the cash 
  payment for any Cash Consideration 
  Amount (where applicable), any 
  accrued and unpaid dividend 
  (in the case of the Preference 
  Shares) or interest (in the 
  case of the Existing Subordinated 
  Notes), and including, if applicable, 
  cash amounts in lieu of any 
  fractional New Notes in exchange 
  for Existing Securities accepted 
  in the Exchange Offer. 
 

The above dates and times are subject, where applicable, to the right of LBG to extend, amend and/or terminate the Exchange Offer, subject to applicable laws.

Holders of Existing Securities are advised to check with any bank, securities broker or other intermediary through which they hold Existing Securities when such intermediary would require to receive instructions from a holder in order for that holder to be able to participate in the Exchange Offer.

Holders of Existing Securities are advised to carefully read the Prospectus for full details and information on the procedures for participating in the Exchange Offer.

Further Information

A registration statement on Form F-4 (including the Prospectus contained therein) relating to the Exchange Offer has been filed with the SEC, but has not yet become effective. The New Notes may not be issued in exchange for the Existing Securities prior to the time the registration statement becomes effective. Consummation of the Exchange Offer is subject to a number of conditions as set forth in the Prospectus included in the registration statement, including among other things, the registration statement of which the Prospectus forms part having been declared effective by the SEC and remaining effective on the settlement date.

Requests for copies of the Prospectus and information in relation to the procedures for tendering Existing Securities in, and for any documents relating to, the Exchange Offer should be directed to:

EXCHANGE AGENT

 
          Lucid Issuer Services Limited 
                    The Shard 
             32 London Bridge Street 
                  London SE1 9SG 
                  United Kingdom 
 
              Tel: +44 207 704 0880 
 
             Attention: Owen Morris / 
                  David Shilson 
             email: lbg@lucid-is.com 
    Website: https://deals.lucid-is.com/lbg-us 
 

Any questions regarding the terms of the Exchange Offer should be directed to:

GLOBAL COORDINATORS AND JOINT LEAD DEALER MANAGERS (the "Dealer Managers")

 
         BofA Securities, Inc.          Credit Suisse Securities                  Lloyds Securities Inc . 
        620 South Tryon Street,         (USA) LLC                                  1095 Avenue of the Americas 
               20th Floor               11 Madison Avenue                          New York, NY 10036 
       Charlotte, North Carolina        New York, New York 10010 
                 28255                                                             Attention: Bond Syndicate 
                                        Attn: Liability Management                 Telephone (U.S.): +1 (212) 
                                        Group                                      827-3145 
    Attention: Liability Management     Tel (London): +44 20 7883                  Email: NALSIBondSyndicate@lbusa.com 
                 Group                  8763 
  Telephone (London): +44-20-7996-5420  Tel (US): +1 (212) 538-2147 
      Telephone (U.S. Toll Free):       Tel (US toll free): +1 
           +1 (888) 292-0070            (800) 820-1653 
       Telephone (U.S.): +1 (980)       Email: 
                387-3907                liability.management@credit-suisse.com 
       Email: DG.LM-EMEA@bofa.com 
 

DISCLAIMER

This announcement must be read in conjunction with the Prospectus. This announcement and the Prospectus contain important information which should be read carefully before any decision is made with respect to the Exchange Offer. If you are in any doubt as to the contents of this announcement or the Prospectus or the action you should take, you are recommended to seek your own financial and legal advice, including as to any tax consequences, immediately from your stockbroker, bank manager, solicitor, accountant or other independent financial or legal adviser. Any individual or company whose Existing Securities are held on its behalf by a broker, dealer, bank, custodian, trust company or other nominee or intermediary must contact such entity if it wishes to participate in the Offers. None of the LBG, Dealer Managers or the Exchange Agent makes any recommendation as to whether holders should offer Existing Securities for exchange pursuant to the Exchange Offer.

OFFER RESTRICTIONS

This announcement and the Prospectus do not constitute an offer or an invitation to participate in the Exchange Offer in any jurisdiction in or from which, or to any person to whom, it is unlawful to make the relevant offer or invitation under applicable laws. The distribution of this announcement and the Prospectus in certain jurisdictions may be restricted by law. Persons into whose possession this announcement and the Prospectus comes are required by each of LBG, the Dealer Managers and the Exchange Agent to inform themselves about, and to observe, any such restrictions.

No action has been or will be taken by LBG, the Dealer Managers or the Exchange Agent in any jurisdiction outside the United States that would constitute a public offering of the New Notes.

United Kingdom

The communication of the Prospectus and any other documents or materials relating to the Exchange Offer is not being made, and such documents and/or materials have not been approved, by an authorized person for the purposes of section 21 of the FSMA. 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 is exempt from the restriction on financial promotions under section 21 of the FSMA on the basis that it is only directed at and may be communicated to (1) those persons who are existing members or creditors of the Group or other persons within Article 43 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, and (2) any other persons to whom these documents and/or materials may lawfully be communicated.

Belgium

None of this announcement, the Prospectus or any other documents or materials relating to the Exchange Offer have been submitted to or will be submitted for approval or recognition to the Financial Services and Markets Authority (Autorité des services et marchés financiers / Autoriteit voor financiële diensten en markten) and, accordingly, the Exchange Offer may not be made in Belgium by way of a public offering, as defined in Articles 3 and 6 of the Belgian Law of April 1, 2007 on public takeover bids as amended or replaced from time to time. Accordingly, the Exchange Offer may not be advertised, and none of this announcement, the Prospectus or any other documents or materials relating to the Exchange 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 unless such person is (i) a "qualified investor" in the sense of Article 2(e) of the Prospectus Regulation, acting on its own account, which (ii) is not a consumer (consommateur/consument) within the meaning of the Belgian Code of Economic Law (Code de droit économique/Wetboek van economisch recht), as amended. The Prospectus has been issued only for the personal use of the above qualified investors and exclusively for the purpose of the Exchange Offer. Accordingly, the information contained in this

announcement and the Prospectus may not be used for any other purpose or disclosed to any other person in Belgium.

France

This announcement, the Prospectus and any other documents or offering materials relating to the Exchange Offer may not be distributed in the Republic of France except to qualified investors (investisseurs qualifiés) as defined in Article 2(e) of the Prospectus Regulation. This announcement and the Prospectus have not been and will not be submitted for clearance to the Autorité des marchés financiers.

Republic of Italy

The Exchange Offer and any solicitation in respect thereof are not being made, directly or indirectly, in or into the Republic of Italy and have not received clearance from the Commissione Nazionale per le Societa e la Borsa (CONSOB) pursuant to Italian securities laws and implementing regulations. Accordingly, Italian holders of the Existing Securities are hereby notified that, to the extent such holders of Existing Securities are persons or entities resident and/or located in the Republic of Italy, the Exchange Offer is not available to them and they may not accept the Exchange Offer and, as such, any tenders of Existing Securities received from such persons or entities shall be ineffective and void. None of the Exchange Offer, this announcement, the Prospectus or any other documents or materials relating to the Exchange Offer has been registered pursuant to Italian securities legislation and, accordingly, no New Notes may be offered, sold, delivered or exchanged, nor may copies of the Prospectus or of any other document relating to the New Notes and the Exchange Offer be distributed or made available in the Republic of Italy.

Canada

The Exchange Offer and any solicitation in respect thereof, and the sale of the New Notes, are not being made, directly or indirectly, in Canada or to holders of the Existing Securities who are resident and/or located in any province or territory of Canada. The Prospectus has not been filed with any securities commission or similar regulatory authority in Canada in connection with the Exchange Offer, and the New Notes have not been, and will not be, qualified for sale under the securities laws of Canada or any province or territory thereof and no securities commission or similar regulatory authority in Canada has reviewed or in any way passed upon the Prospectus, any other documents or materials relating to the Exchange Offer or the merits of the New Notes and any representation to the contrary is an offence. Accordingly, Canadian holders of the Existing Securities are hereby notified that, to the extent such holders of Existing Securities are persons or entities resident and/or located in Canada, the Exchange Offer is not available to them and they may not accept the Exchange Offer. As such, any tenders of Existing Securities received from such persons or entities shall be ineffective and void. No New Notes may be offered, sold, delivered or exchanged, nor may copies of the Prospectus or of any other document relating to the New Notes and the Exchange Offer be distributed or made available in Canada. The Prospectus and any other documents or offering materials relating to the Exchange Offer or the New Notes may not be distributed in Canada and the Prospectus does not constitute an offer or an invitation to participate in the Exchange Offer to any person resident in Canada.

General

The Exchange Offer does not constitute an offer to buy or the solicitation of an offer to sell Existing Securities and/or New Notes in any circumstances in which such offer or solicitation is unlawful. In those jurisdictions where the securities or other laws require the Exchange Offer to be made by a licensed broker or dealer or registered dealer and the Dealer Manager or, where the context so requires, any of its affiliates is such a licensed broker or dealer or registered dealer in that jurisdiction, the Exchange Offer shall be deemed to be made on behalf of LBG by such Dealer Manager or affiliate (as the case may be) in such jurisdiction.

Each holder of Existing Securities participating in the Exchange Offer will be deemed to give certain representations in respect of the jurisdictions referred to above and generally as set out in "The Exchange Offer-Certain Matters Relating to Non-U.S. Jurisdictions" in the Prospectus. Any tender of Existing Securities for exchange pursuant to the Exchange Offer from a holder that is unable to make these representations may be rejected. LBG, the Dealer Managers and the Exchange Agent reserve the right, in their absolute discretion, to investigate, in relation to any tender of Existing Securities for exchange pursuant to the Exchange Offer, whether any such representation given by a holder is correct and, if such investigation is undertaken and as a result LBG determines, as the case may be, (for any reason) that such representation is not correct, such tender may be rejected.

Further Information

This announcement contains inside information in relation to the Existing Securities and is disclosed in accordance with the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("UK MAR"). For the purposes of UK MAR and Article 2 of the binding technical standards published by the Financial Conduct Authority in relation to UK MAR as regards Commission Implementing Regulation (EU) 2016/1055, this announcement is made by Douglas Radcliffe, Group Investor Relations Director.

For further information please contact:

Group Corporate Treasury:

Liz Padley

Head of Capital Structuring, Holding Company and Resolution

Telephone: +44 (0)20 7158 1737

Email: Claire-Elizabeth.Padley@LloydsBanking.com

Investor Relations:

Douglas Radcliffe

Group Investor Relations Director

Telephone: +44 (0)20 7356 1571

Email: Douglas.Radcliffe@LloydsBanking.com

Corporate Affairs:

Matthew Smith

Head of Media Relations

Tel: +44 (0)20 7356 3522

Email: matt.smith@lloydsbanking.com

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December 07, 2021 11:07 ET (16:07 GMT)

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