Lloyds Banking Group PLC Subordinated Debt Securities Exchange Offer (7378G)

TIDMLLOY

RNS Number : 7378G

Lloyds Banking Group PLC

24 November 2015

News Release

23 November 2015

NOT FOR DISTRIBUTION IN ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION. THE EXCHANGE OFFER IS AVAILABLE only TO (1) QUALIFIED INSTITUTIONAL BUYERS in a private transaction in reliance upon the exemption from the registration requirements of the Securities Act provided by Section 4(a)(2) thereof and (2) outside the United States, to persons other than "U.S. persons" as defined in Rule 902 under the Securities Act in offshore transactions in compliance with Regulation S under the Securities Act. THE EXCHANGE OFFER IS MADE SUBJECT TO OFFER RESTRICTIONS IN CERTAIN JURISDICTIONS (SEE "OFFER RESTRICTIONS" BELOW).

LLOYDS BANKING GROUP PLC COMMENCES AN EXCHANGE OFFER FOR CERTAIN SUBORDINATED DEBT SECURITIES

Further to the announcement earlier today, Lloyds Banking Group plc ("LBG") has now commenced an offer to certain eligible holders to exchange specified series of outstanding subordinated debt securities issued by HBOS plc and Lloyds Bank plc, wholly-owned subsidiaries of LBG, for LBG's Tier 2 subordinated debt securities set out in the table below (the "Exchange Offer"). Earlier today, LBG also launched an offering for cash of new Tier 2 subordinated debt securities.

The Exchange Offer provides LBG with an opportunity to further enhance the quality of its capital base.

Exchange Offer

The Exchange Offer is being made on the terms and subject to the conditions set out in the Exchange Offer Memorandum dated 23 November 2015 (the "Exchange Offer Memorandum"). Capitalized terms not otherwise defined in this announcement have the same meaning as in the Exchange Offer Memorandum.

The Exchange Offer consists of:

-- an offer to exchange 6.50% Fixed Rate Lower Tier 2 Notes due 2020 issued by Lloyds Bank plc and guaranteed by LBG (the "2020 Old Notes") for Subordinated Debt Securities due 2025 issued by LBG (the "2025 New Notes") (the "2025 Exchange Offer"); and

-- an offer to exchange 6.00% Subordinated Notes due 2033 issued by HBOS plc (the "2033 Old Notes") for 5.300% Subordinated Debt Securities due 2045 (the "2045 New Notes") issued by LBG (the "2045 Exchange Offer").

The 2020 Old Notes and the 2033 Old Notes are together referred to as the "Old Notes". The 2025 New Notes and the 2045 New Notes are together referred to as the "New Notes".

The table below sets forth certain information relating to the 2025 Exchange Offer:

 
                                                                                                                Hypothetical 
                                                                                                                    Total      Hypothetical 
                            Principal     Reference   Bloomberg  2020 Old Notes  2025 New Notes      Early        Exchange       Exchange 
                              Amount       Treasury   Reference   Fixed Spread    Fixed Spread   Participation  Consideration  Consideration 
 Old Notes      CUSIP      Outstanding     Security     Page     (basis points)  (basis points)   Payment(1)      (1)(2)(3)    (1)(2)(3)(4) 
------------  ----------  --------------  ----------  ---------  --------------  --------------  -------------  -------------  ------------- 
Lloyds Bank 
  plc 6.50% 
 Fixed Rate 
 Lower Tier                               1.375% due 
 2 Notes due  53947NAA2                   31 October 
    2020       53947QAA5  $2,000,000,000     2020        PX1          100             235             $50         $1,170.56      $1,120.56 
 
   (1)    Per $1,000 principal amount of 2020 Old Notes accepted for exchange. 

(2) The Exchange Consideration for each $1,000 principal amount of 2020 Old Notes tendered after the Early Participation Date (as defined below) but at or prior to the Expiration Deadline (as defined below) will be 2025 New Notes in a principal amount equal to the Total Exchange Consideration less the Early Participation Payment.

(3) The Hypothetical Total Exchange Consideration is based on the fixed spread for the 2020 Old Notes to the yield on the Reference U.S. Treasury Security as of 11:00 a.m., New York City time, on 20 November 2015. The information provided in the above table is for illustrative purposes only. See Annex A to the Exchange Offer Memorandum for the formula to be used to calculate the Total Exchange Consideration.

(4) The Hypothetical Exchange Consideration is equal to the Hypothetical Total Exchange Consideration less the Early Participation Payment.

The table below sets forth certain information relating to the 2045 Exchange Offer:

 
                                                                                                                     Hypothetical                                Hypothetical 
                                                                                                                         Total      Hypothetical   Hypothetical    2045 New 
                                  Principal    Reference   Bloomberg  2033 Old Notes  2045 New Notes      Early        Exchange       Exchange       2045 New       Notes 
                                    Amount      Treasury   Reference   Fixed Spread    Fixed Spread   Participation  Consideration  Consideration     Notes        Exchange 
     Old Notes         CUSIP     Outstanding    Security     Page     (basis points)  (basis points)   Payment(1)      (1)(2)(3)    (1)(2)(3)(5)   Value(4)(6)     Ratio(7) 
-------------------  ----------  ------------  ----------  ---------  --------------  --------------  -------------  -------------  -------------  ------------  ------------ 
  HBOS plc 6.00%                               2.875% due 
 Subordinated Notes  4041A2AF1                 15 August 
      due 2033        4041A3AG7  $750,000,000     2045        PX1          180             230             $50         $1,141.25      $1,091.25      $998.04      $1,143.49 
 
   (1)    Per $1,000 principal amount of 2033 Old Notes accepted for exchange. 

(2) The Exchange Consideration for each $1,000 principal amount of 2033 Old Notes tendered after the Early Participation Date but at or prior to the Expiration Deadline will be the Total Exchange Consideration less the Early Participation Payment.

(3) The Hypothetical Total Exchange Consideration is based on the fixed spread for the 2033 Old Notes to the yield on the Reference U.S. Treasury Security as of 11:00 a.m., New York City time, on 20 November 2015. The information provided in the above table is for illustrative purposes only. See Annex A to the Exchange Offer Memorandum for the formula to be used to calculate the Total Exchange Consideration.

   (4)    Per $1,000 principal amount of 2045 New Notes. 

(5) The Hypothetical Exchange Consideration is equal to the Hypothetical Total Exchange Consideration less the Early Participation Payment.

(6) The Hypothetical 2045 New Notes Value is shown for illustrative purposes only and will be determined as of 11:00 a.m., New York City time, on 8 December 2015 in accordance with the formula set forth in Annex A to the Exchange Offer Memorandum.

(7) The Hypothetical 2045 New Notes Exchange Ratio is equal to (a) the Hypothetical Total Exchange Consideration, divided by (b) the Hypothetical 2045 New Notes Value multiplied by (c) $1,000. Such amount represents the aggregate principal amount of 2045 New Notes a holder would receive for each $1,000 of 2033 Old Notes tendered at or prior to the Early Participation Date.

Concurrent Private Offering

In conjunction with the Exchange Offer, LBG today also announced an offering for cash of $500 million aggregate principal amount of its 5.300% Subordinated Debt Securities due 2045, which are expected to be issued on 1 December 2015 (the "2045 Original Notes"). The 2045 New Notes offered in the Exchange Offer will constitute a further issuance of, will form a single series with, and have the same CUSIP numbers as the 2045 Original Notes.

Total Exchange Consideration; Exchange Consideration

Upon the terms and subject to the conditions set forth in the Exchange Offer Memorandum, holders who validly tender and who do not validly withdraw Old Notes at or prior to the Early Participation Date, and whose tenders are accepted for exchange by LBG, will receive the applicable Total Exchange Consideration for each $1,000 principal amount of Old Notes. The Exchange Consideration for each $1,000 principal amount of Old Notes tendered after the Early Participation Date but at or prior to the Expiration Deadline will be the Total Exchange Consideration less the applicable Early Participation Payment.

2025 Exchange Offer

The Total Exchange Consideration in the 2025 Exchange Offer is based on the fixed spread for the 2020 Old Notes to the yield on the applicable Reference U.S. Treasury Security as of 11:00 a.m. New York City time, on 8 December 2015.

The 2025 New Notes will mature on 10 December 2025 and will bear interest at a rate per annum (the "2025 Notes Coupon") equal to the sum of (a) the bid-side yield on the 2.25% U.S. Treasury Security due 15 November 2025 (the "2025 New Notes Reference Security"), as calculated by the Dealer Managers in accordance with standard market practice, that equates to the bid-side price of the 2025 New Notes Reference Security, as of 11:00 a.m., New York City time, on 8 December 2015, as displayed on the Bloomberg Reference page PX1 (or any recognized quotation source selected by the Dealer Managers if such quotation report is not available or manifestly erroneous) plus (b) a fixed spread of 235 basis points, such sum rounded to the third decimal place when expressed as a percentage.

2045 Exchange Offer

The Total Exchange Consideration in the 2045 Exchange Offer is based on the fixed spread for the 2033 Old Notes to the yield on the Reference U.S. Treasury Security for that series as of 11:00 a.m., New York City time, on 8 December 2015.

(MORE TO FOLLOW) Dow Jones Newswires

November 24, 2015 03:11 ET (08:11 GMT)