Discover Bank Announces Pricing Terms of Exchange Offer
01 Novembre 2012 - 6:50PM
Business Wire
Discover Bank (the “Bank”) announced today the pricing terms of
its private offer to exchange its outstanding notes referenced
in the table below (the “Bank Notes”) for new senior notes of its
parent company Discover Financial Services (“DFS”) due November 21,
2022 (the “DFS Notes”) and cash (the “Exchange Offer”), determined
as of 11:00 a.m., New York City time, on November 1, 2012 (the
“Price Determination Date”) in accordance with the terms set out in
the Bank’s confidential offering memorandum dated October 19, 2012
(the “Confidential Offering Memorandum”) and the related letter of
transmittal.
The interest rate on the DFS Notes will be 3.850%. The yield on
the DFS Notes will be 3.874% and the “DFS Notes Value” of the DFS
Notes will be $998.03, which has been determined by reference to
the bid-side yield on the 1.625% U.S. Treasury due August 15, 2022
as of the Price Determination Date, which was 1.724%.
The total exchange price to be received in the Exchange Offer
(the “Total Exchange Price”) for each $1,000 principal amount of
Bank Notes validly tendered, and not validly withdrawn, prior to
5:00 p.m., New York City time, on November 1, 2012 (the “Early
Participation Date”) is set forth in the table below. The Total
Exchange Price includes the early exchange premium of $50.00 per
$1,000 principal amount of Bank Notes (the “Early Exchange
Premium”) validly tendered, and not validly withdrawn, prior to the
Early Participation Date. The Total Exchange Price has been
determined in accordance with the procedures set forth in the
Confidential Offering Memorandum. Holders of Bank Notes who validly
tender Bank Notes after the Early Participation Date and whose Bank
Notes are accepted in the Exchange Offer will receive the Total
Exchange Price less the Early Exchange Premium (the “Exchange
Price”).
The table below shows the Total Exchange Price and Exchange
Price per $1,000 principal amount of Bank Notes accepted in the
Exchange Offer.
CUSIP Number
Title of Security
Reference U.S.
Treasury Security
Reference UST
Yield
Fixed Spread
(basispoints)
Exchange Offer Cap
Exchange Price
EarlyExchange
Premium
TotalExchange
Price
25466AAA9
8.70%SubordinatedNotes Due2019
1.625% dueAugust 15,2022
1.724% + 135 $500,000,000 $1,301.53 $50.00 $1,351.53
The Total Exchange Price will be paid in the following
manner:
- $1,000 principal amount of DFS Notes;
plus,
- $353.50 in cash, which is equal to
(a) the Total Exchange Price minus (b) the DFS Notes
Value.
The Exchange Price will be paid in the following manner:
- $1,000 principal amount of DFS Notes;
plus,
- $303.50 in cash, which is equal to
(a) the Exchange Price minus (b) the DFS Notes
Value.
In addition to the Total Exchange Price or Exchange Price,
holders whose Bank Notes are accepted for exchange will be paid
accrued and unpaid interest on such Bank Notes to but not including
the settlement date, described below.
The “Settlement Date” is expected to be on November 21, 2012 and
will apply to all Bank Notes validly tendered and accepted for
exchange pursuant to the terms and conditions of the Exchange
Offer.
The Exchange Offer is being conducted by the Bank upon the terms
and subject to the conditions set forth in the Confidential
Offering Memorandum and related letter of transmittal. The Exchange
Offer is only extended, and copies of the offering documents will
only be made available, to a holder of Bank Notes that has
certified its status as (1) a “Qualified Institutional Buyer” as
defined in Rule 144A under the Securities Act of 1933 (the
“Securities Act”) or (2) (A) a person who is not a “U.S. person” as
defined in Regulation S under the Securities Act and (B) if
resident and/or located in any Member State of the European
Economic Area which has implemented provisions of the Directive
2003/71/EC (as amended, including pursuant to Directive 2010/73/EU,
the “Prospectus Directive”), a qualified investor as defined in
Article 2.1(e) of the Prospectus Directive (each, an “Eligible
Holder”).
The Exchange Offer is subject to certain conditions, including
the requirement that a minimum of $250 million aggregate
principal amount of DFS Notes be issued in exchange for Bank Notes
validly tendered and not validly withdrawn.
The Exchange Offer will expire at 11:59 p.m., New York
City time, on November 16, 2012, unless extended or
earlier terminated by the Bank (the “Expiration Date”).
The DFS Notes will not be registered under the Securities Act or
any state securities laws. Therefore, the DFS Notes may not be
offered or sold in the United States absent registration
or an applicable exemption from the registration requirements of
the Securities Act and any applicable state securities laws. DFS
will enter into a registration rights agreement with respect to the
DFS Notes.
Documents relating to the Exchange Offer will only be
distributed to holders of the Bank Notes that complete and return a
letter of eligibility confirming that they are Eligible Holders.
Holders of the Bank Notes that desire to review the eligibility
letter may visit the website for this purpose at http://www.dfking.com/discover or contact
D.F. King & Co., Inc., the information agent for the Exchange
Offer, by calling toll-free (800) 859-8509 or at (212) 269-5550
(banks and brokerage firms).
This press release is not an offer to sell or a solicitation of
an offer to buy any security. The Exchange Offer is being made
solely by the Confidential Offering Memorandum and related letter
of transmittal and only to such persons and in such jurisdictions
as is permitted under applicable law.
This press release contains certain statements that are
forward-looking within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements are not guarantees
of future performance and involve certain risks, uncertainties and
assumptions that are difficult to predict. Actual outcomes and
results may differ materially from those expressed in, or implied
by, the Bank’s forward-looking statements. Words such as “expects,”
“anticipates,” believes,” “estimates” and other similar expressions
or future or conditional verbs such as “will,” “should,” “would”
and “could” are intended to identify such forward-looking
statements. Forward-looking statements speak only as of the date of
this press release, and the Bank undertakes no obligation to update
any forward-looking statement.
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