Discover to Replace Senior Notes - Analyst Blog
10 Aprile 2012 - 1:45PM
Zacks
Discover Financial Services (DFS) has announced
an offer to exchange its outstanding 10.25% senior notes, due 2019,
and 6.45% senior notes, due 2017, with new senior notes, due 2022.
The old notes have an outstanding principal of $400 million, a
portion of which will be reimbursed in cash.
The new notes will be issued for a minimum aggregate principal
value of $250 million. Moreover, the 10.25% senior notes will get
priority during replacement. While all of the 10.25% notes
will be replaced, the 6.45% notes will only be exchanged if the
principal value of the new notes, issued in place of the 10.25%
notes, does not exceed $250 million.
Further, the 6.45% notes will be replaced on a pro-rata basis to
the extent that the aggregate principal value of the new notes,
issued in replacement of both types of old notes, reaches $250
million. Additionally, the 6.45% notes will only be replaced for a
maximum of $50 million principal value of the new notes.
The exchange offer is only open to qualified institutional
buyers and people who are not U.S. persons, as defined in the
Securities Act of 1933. Moreover, if the non-U.S. person is a
resident of a member state of the European Economic Area, covered
by Directive 2003/71/EC, then that person should be a qualified
investor, as defined in the Prospectus Directive.
The exchange offer is valid till May 4, 2012. However, holders
of old notes, who apply for the exchange offer and do not withdraw
their tender before April 20, 2012, will receive an early exchange
premium of $50 per $1000 principal value. Additionally, valid
tenders cannot be withdrawn after April 20, 2012.
Discover holds the right to extend the date of the exchange
offer as well as the withdrawal deadline. Additionally, the company
will not register the new notes under the Securities Act or any
state securities laws.
Discover is a cards and electronic payment services company. The
company competes with credit card giants such as MasterCard
Inc. (MA) and Visa Inc. (V).
Currently, Discover carries a Zacks #2 Rank, which translates
into a short-term ‘Buy’ rating. We maintain our long-term
‘Outperform’ recommendation on the stock.
DISCOVER FIN SV (DFS): Free Stock Analysis Report
MASTERCARD INC (MA): Free Stock Analysis Report
VISA INC-A (V): Free Stock Analysis Report
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