BofA (BAC) Commences Tender for MBIA, Inc. (MBI) Notes
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Price: $36.97 +3.35%
Overall Analyst Rating:
NEUTRAL (= Flat)
Dividend Yield: 2.8%
Revenue Growth %: -1.9%
Overall Analyst Rating:
NEUTRAL (= Flat)
Dividend Yield: 2.8%
Revenue Growth %: -1.9%
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Bank of America Corporation (NYSE: BAC) announced today that it has commenced an offer to purchase for cash (the “Tender Offer”) any and all of the outstanding 5.70% Senior Notes due 2034 (CUSIP No. 55262CAJ9) (the “2004 MBIA Notes”) issued by MBIA Inc. (NYSE: MBI), a Connecticut corporation (MBIA), pursuant to a senior indenture dated as of November 24, 2004 (as supplemented, the “2004 Indenture”), between MBIA and The Bank of New York Mellon as trustee.
The purpose of the Tender Offer is to induce holders of record of 2004 MBIA Notes as of 5:00 p.m., New York City time, on November 6, 2012, and who have the right to grant or withhold consent to the 2004 Proposed Amendments (as defined below) (each an “Eligible Holder” and collectively the “Eligible Holders”) to sell their 2004 MBIA Notes to the Offeror rather than consent to certain proposed amendments to the 2004 Indenture (the “2004 Proposed Amendments”) being sought by MBIA in connection with MBIA’s consent solicitation, commenced on November 7, 2012 (the “MBIA Consent Solicitation”).
Affiliates of the Offeror are party to certain credit default swap transactions for which MBIA Insurance Corporation (a subsidiary of MBIA) has provided credit support with a notional value of $6.15 billion (against which we have established credit valuation adjustments for a significant portion). Bank of America believes that if the MBIA Consent Solicitation is successful, the risk of MBIA Insurance Corporation being placed in rehabilitation or liquidation will increase, which would jeopardize all policyholder claims, including Bank of America’s claims under these transactions.
Eligible Holders of 2004 MBIA Notes that are validly tendered and not validly withdrawn prior to 11:59 p.m., New York City time, on November 27, 2012 (the “Early Tender Date”), unless extended by the Offeror, will be eligible to receive the “Total Consideration” of $1,000 in cash per $1,000 principal amount of 2004 MBIA Notes that are accepted for payment, which includes an “Early Tender Premium” of $50 in cash per $1,000 principal amount of 2004 MBIA Notes. Eligible Holders of the 2004 MBIA Notes that are validly tendered after the Early Tender Date but prior to 11:59 p.m., New York City time, on December 11, 2012 (the “Expiration Date”), unless extended by the Offeror, will be eligible to receive only the “Tender Offer Consideration” of $950 in cash per $1,000 principal amount of 2004 MBIA Notes that are accepted for purchase.
In addition to the Total Consideration or the Tender Offer Consideration, as applicable, Eligible Holders whose 2004 MBIA Notes are accepted for purchase in the Tender Offer will also receive accrued and unpaid interest in cash from the most recent interest payment date on the 2004 MBIA Notes up to, but not including, the settlement date for the Tender Offer, which is expected to occur promptly after the Expiration Date, assuming all conditions of the Tender Offer have been either satisfied or waived. The Tender Offer is irrevocable, subject only to the satisfaction or waiver of the express conditions set forth in the Offer to Purchase. The Offeror expressly reserves the right to extend the Early Tender Date, the Withdrawal Deadline (as defined below) and/or the Expiration Date, and to amend the Tender Offer in a manner not adverse to holders of the 2004 MBIA Notes, as described more fully in the materials being sent to holders of 2004 MBIA Notes.
Eligible Holders of the 2004 MBIA Notes will be entitled to withdraw their tendered Notes prior to 11:59 p.m., New York City time, on November 27, 2012 (the “Withdrawal Deadline”), but not thereafter, unless the Withdrawal Deadline is extended by the Offeror.
The Tender Offer is subject to certain conditions including (i) there having been validly tendered pursuant to the Tender Offer, and not validly withdrawn, not less than a majority in aggregate principal amount of the 2004 MBIA Notes outstanding; (ii) MBIA shall not have obtained the requisite consent of Eligible Holders needed to validly approve the 2004 Proposed Amendments, and the 2004 Proposed Amendments shall not have become effective; and (iii) other customary conditions. By tendering 2004 MBIA Notes, an Eligible Holder will be required to represent and warrant that it is an Eligible Holder and that either it has not delivered a consent in connection with the MBIA Consent Solicitation or any consent previously delivered by it has been timely and validly revoked, and will be required to covenant that it will not deliver any consent in connection with the MBIA Consent Solicitation (or any amendment or supplement thereto) or otherwise vote in favor of the 2004 Proposed Amendments. Eligible Holders of 2004 MBIA Notes may not tender their 2004 MBIA Notes in the Tender Offer and also submit consents in the MBIA Consent Solicitation. However, Eligible Holders who have submitted consents in the MBIA Consent Solicitation and who timely and validly revoke their consents may tender their 2004 MBIA Notes in the Tender Offer.
The complete terms and conditions of the Tender Offer are described in the Offer to Purchase, dated November 13, 2012 (the "Offer to Purchase"), and the related Letter of Transmittal (the "Letter of Transmittal").
The purpose of the Tender Offer is to induce holders of record of 2004 MBIA Notes as of 5:00 p.m., New York City time, on November 6, 2012, and who have the right to grant or withhold consent to the 2004 Proposed Amendments (as defined below) (each an “Eligible Holder” and collectively the “Eligible Holders”) to sell their 2004 MBIA Notes to the Offeror rather than consent to certain proposed amendments to the 2004 Indenture (the “2004 Proposed Amendments”) being sought by MBIA in connection with MBIA’s consent solicitation, commenced on November 7, 2012 (the “MBIA Consent Solicitation”).
Affiliates of the Offeror are party to certain credit default swap transactions for which MBIA Insurance Corporation (a subsidiary of MBIA) has provided credit support with a notional value of $6.15 billion (against which we have established credit valuation adjustments for a significant portion). Bank of America believes that if the MBIA Consent Solicitation is successful, the risk of MBIA Insurance Corporation being placed in rehabilitation or liquidation will increase, which would jeopardize all policyholder claims, including Bank of America’s claims under these transactions.
Eligible Holders of 2004 MBIA Notes that are validly tendered and not validly withdrawn prior to 11:59 p.m., New York City time, on November 27, 2012 (the “Early Tender Date”), unless extended by the Offeror, will be eligible to receive the “Total Consideration” of $1,000 in cash per $1,000 principal amount of 2004 MBIA Notes that are accepted for payment, which includes an “Early Tender Premium” of $50 in cash per $1,000 principal amount of 2004 MBIA Notes. Eligible Holders of the 2004 MBIA Notes that are validly tendered after the Early Tender Date but prior to 11:59 p.m., New York City time, on December 11, 2012 (the “Expiration Date”), unless extended by the Offeror, will be eligible to receive only the “Tender Offer Consideration” of $950 in cash per $1,000 principal amount of 2004 MBIA Notes that are accepted for purchase.
In addition to the Total Consideration or the Tender Offer Consideration, as applicable, Eligible Holders whose 2004 MBIA Notes are accepted for purchase in the Tender Offer will also receive accrued and unpaid interest in cash from the most recent interest payment date on the 2004 MBIA Notes up to, but not including, the settlement date for the Tender Offer, which is expected to occur promptly after the Expiration Date, assuming all conditions of the Tender Offer have been either satisfied or waived. The Tender Offer is irrevocable, subject only to the satisfaction or waiver of the express conditions set forth in the Offer to Purchase. The Offeror expressly reserves the right to extend the Early Tender Date, the Withdrawal Deadline (as defined below) and/or the Expiration Date, and to amend the Tender Offer in a manner not adverse to holders of the 2004 MBIA Notes, as described more fully in the materials being sent to holders of 2004 MBIA Notes.
Eligible Holders of the 2004 MBIA Notes will be entitled to withdraw their tendered Notes prior to 11:59 p.m., New York City time, on November 27, 2012 (the “Withdrawal Deadline”), but not thereafter, unless the Withdrawal Deadline is extended by the Offeror.
The Tender Offer is subject to certain conditions including (i) there having been validly tendered pursuant to the Tender Offer, and not validly withdrawn, not less than a majority in aggregate principal amount of the 2004 MBIA Notes outstanding; (ii) MBIA shall not have obtained the requisite consent of Eligible Holders needed to validly approve the 2004 Proposed Amendments, and the 2004 Proposed Amendments shall not have become effective; and (iii) other customary conditions. By tendering 2004 MBIA Notes, an Eligible Holder will be required to represent and warrant that it is an Eligible Holder and that either it has not delivered a consent in connection with the MBIA Consent Solicitation or any consent previously delivered by it has been timely and validly revoked, and will be required to covenant that it will not deliver any consent in connection with the MBIA Consent Solicitation (or any amendment or supplement thereto) or otherwise vote in favor of the 2004 Proposed Amendments. Eligible Holders of 2004 MBIA Notes may not tender their 2004 MBIA Notes in the Tender Offer and also submit consents in the MBIA Consent Solicitation. However, Eligible Holders who have submitted consents in the MBIA Consent Solicitation and who timely and validly revoke their consents may tender their 2004 MBIA Notes in the Tender Offer.
The complete terms and conditions of the Tender Offer are described in the Offer to Purchase, dated November 13, 2012 (the "Offer to Purchase"), and the related Letter of Transmittal (the "Letter of Transmittal").
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