FedEx has released the early results of its previously announced cash tender offer for multiple series of notes. By the early tender deadline, the total amount of valid tenders had already surpassed the company's established purchase limit of $4.15 billion.
This tender offer was officially launched on June 25. According to the offer's terms, FedEx is employing a cascading priority acceptance system, accepting tendered notes sequentially based on their priority level. The company anticipates it will accept in full the notes from twelve priority levels, including the 4.500% notes due 2065, the 3.250% notes due 2041, and the 4.050% notes due 2048. To stay within the purchase limit, the acceptance of the 5.100% notes due 2044 will be on a pro rata basis. Notes with lower priority, such as the 3.100% notes due 2029, the 5.250% notes due 2050, and the 3.400% notes due 2028, will not be accepted.
This debt management move follows the completion of FedEx's freight business separation on June 1st. As part of that transaction, FedEx Freight paid a cash dividend of approximately $4.1 billion to its parent company. The current tender offer utilizes these funds to reduce the company's existing debt, aiming to maintain a leverage-neutral financial position post-separation.
The consideration for accepted notes will be determined based on a fixed spread added to the applicable U.S. Treasury yield. Holders who tendered their notes before the early deadline will receive the total consideration, which includes an early tender premium of $30 per $1,000 principal amount along with accrued interest. Several institutions are acting as dealer managers for this transaction.
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