International Paper Announces Debt Tender Offer
Memphis, Tennessee, USA, 22 November 2006 -- /PRNewswire/ -- International Paper (NYSE:IP) has commenced a cash tender offer to purchase a portion of its outstanding bonds. The terms and conditions of the tender offer are described in an offer to purchase dated 22 November 2006.
Pursuant to the tender offer, International Paper would use up to USD 2.35 billion in cash (excluding accrued interest, fees, and expenses) to repurchase a portion of its outstanding bonds.
On 13 July, the company announced plans to spend approximately USD 6 billion to USD 7 billion to strengthen its balance sheet, primarily through debt repayment, as a component of its transformation plan, launched in 2005. This tender offer represents a portion of that debt repayment. As of the end of the third quarter, International Paper had debt of approximately USD 10.5 billion, reduced from approximately USD 13.4 billion at the end of the 2005 second quarter.
"We committed to our shareowners that we would use a portion of proceeds from our transformation plan to strengthen our balance sheet, and that's what we're doing," said John Faraci, International Paper chairman and chief executive.
The Tender Offer
The amounts of each series of bonds that are purchased in the tender offer will be determined in accordance with the priorities identified in the column "Acceptance Priority Level" in the table following this release. The tender offer will expire at 12:00 midnight, Eastern time, on 20 December 2006, unless extended.
Holders of bonds subject to the tender offer must validly tender and not validly withdraw their bonds on or before the early tender date, which is 5 p.m. Eastern time on 06 December 2006, unless extended, to receive the applicable total tender offer consideration. Holders of bonds subject to the tender offer who validly tender their bonds after the early tender date and on or before the expiration date and whose bonds are accepted for purchase will receive the applicable late tender offer consideration, namely the total tender offer consideration less the applicable early tender premium.
The applicable total tender offer consideration for each USD 1000 in principal amount of bonds tendered and accepted for payment pursuant to the tender offer will be determined in the manner described in the offer to purchase. The consideration will be determined by reference to a fixed spread specified for such bonds over the yield based on the bid-side price of the applicable U.S. Treasury Security specified in the table following this release, as fully described in the offer to purchase. The consideration will be calculated by the dealer managers for the tender offer at 2 p.m. Eastern time on the second business day preceding the expiration date. The late tender offer consideration is the applicable total tender offer consideration minus the applicable early tender premium.
In addition to the applicable total tender offer consideration or applicable late tender offer consideration, as the case may be, accrued and unpaid interest up to, but not including, the applicable settlement date will be paid in cash on all validly tendered bonds accepted for purchase in the tender offer. The settlement date for the tender offer will be the first business day following the expiration date and currently is expected to be 21 December 2006.
Holders of bonds subject to the tender offer who validly tender their bonds on or before the early tender date may not withdraw their bonds after the early tender date except in the limited circumstances described in the offer to purchase. Holders of bonds subject to the tender offer who validly tender their bonds after the early tender date, but on or before the expiration date, may not withdraw their bonds except in the limited circumstances described in the offer to purchase.
Banc of America Securities LLC, Citigroup Corporate and Investment Banking, J.P. Morgan Securities Inc. are the dealer managers of the tender offer and Barclays Capital, Inc., Deutsche Bank Securities Inc., and Morgan Stanley are serving as co-dealer managers for the tender offer. Global Bondholders Services Corporation has been retained to serve as the depositary and information agent.
Persons with questions regarding the tender offer should contact Banc of America Securities LLC at (toll-free) (866) 475-9886, Citigroup Corporate and Investment Banking at (toll-free) (800) 558-3745 and J.P. Morgan Securities Inc. at (toll-free) (866) 834-4666. Requests for copies of the offer to purchase, letter of transmittal, and related materials should be directed to Global Bondholders Services Corporation at (212) 430-3774 or (toll-free) (866) 470-4200.
About International Paper's Transformation Plan
Today's announcement is part of the transformation plan International Paper announced in July 2005 to strengthen the company by:
* focusing on two global platform businesses (uncoated papers and
packaging, along with xpedx, its merchant distribution business) and
improving profitability of those key businesses;
* exploring strategic options, including possible sale or spin-off, for
certain assets or businesses; and
* using proceeds from divestitures to return value to shareowners,
strengthen the company's balance sheet, and selectively reinvest in its
two global platform businesses.
Details about the transformation plan and related divestitures are contained in the company's Securities and Exchange Commission filings.
Headquartered in the United States, International Paper has been a leader in the forest products industry for more than 100 years. The company is currently transforming its operations to focus on its global uncoated papers and packaging businesses, which operate and serve customers in the United States, Europe, South America, and Asia. These businesses are complemented by an extensive North American merchant distribution system. International Paper is committed to environmental, economic, and social sustainability, and has a long-standing policy of using no wood from endangered forests. To learn more, visit http://www.internationalpaper.com/.
NOTES SUBJECT TO THE TENDER OFFER
($ = USD)
Accept- Bloom- Early
Aggregate ance Reference berg Fixed Ten-
Principal Prior- U.S. Refer- Spread der
CUSIP Title of Amount ity Treasury ence (basis Pre-
Number Security Outstanding Level Security Page points) mium
158525AQ8 7.75% $123,642,000 1 4.500% U.S. PX1 168 $25.00
debentures Treasury Note due
due 2025 15 Feb. 2036
158525AR6 7.35% $174,995,000 2 4.500% U.S. PX1 168 $25.00
460146BD4 6.875% $134,715,000 3 4.500% U.S. PX1 163 $25.00
158525AT2 7.20% $200,000,000 4 4.500% U.S. PX1 168 $25.00
158525AV7 7.15% $80,175,000 5 4.500% U.S. PX1 173 $25.00
460146AP8 6.875% $190,000,000 6 4.500% U.S. PX1 165 $25.00
313693AD5 10% $23,421,000 7 4.625% U.S. PX1 63 $10.00
due 2011 31 Oct. 2011
313693AF0 8.875% $95,855,000 8 4.625% U.S. PX1 68 $10.00
due 2012 15 Nov. 2016
460146BS1 3.80% $288,085,000 9 4.875% U.S. PX1 50 $5.00
notes Treasury Note due
905530AH4 9.25% $124,800,000 10 4.625% U.S. PX1 58 $10.00
460146BN2 6.75% $768,634,000 11 4.625% U.S. PX1 53 $10.00
460146BX0 5.50% $351,301,000 12 4.625% U.S. PX1 95 $10.00
460146BQ5 5.85% $802,771,000 13 4.625% U.S. PX1 58 $10.00
460146BV4 4.25% $407,115,000 14 4.875% U.S. PX1 50 $5.00
460146BU6 5.30% $451,588,000 15 4.625% U.S. PX1 105 $10.00
460146BZ5 5.25% $281,120,000 16 4.625% U.S. PX1 113 $10.00
460146BY8 4.00% $414,350,000 17 4.625% U.S. PX1 50 $5.00
158525AU9 6.65% $100,000,000 18 4.500% U.S. PX1 160 $25.00