Tenneco Announces Debt Tender and Exchange Offers
5 October 1999
Tenneco Announces Debt Tender and Exchange Offers and Concurrent, Related Consent Solicitations
GREENWICH, Conn.--Oct. 5, 1999--Tenneco Inc. today announced it has commenced cash tender and exchange offers and related, concurrent consent solicitations for $2.46 billion principal amount of its notes and debentures.Tenneco previously announced its intent to separate Tenneco Automotive and Tenneco Packaging through a spin-off and tax-free distribution of Tenneco Packaging to existing shareholders of Tenneco Inc.'s common stock. The company also announced previously that it has received a favorable ruling from the Internal Revenue Service. The tender offers and exchange offers are being conducted as part of a plan to realign the debt to facilitate the separation of Tenneco Packaging and Tenneco Automotive into independent, publicly traded companies.
Tenneco Automotive, the continuing company following the separation, is an automotive parts manufacturer with $3.2 billion in 1998 revenues. Tenneco Packaging, which is being spun off and shares in which are being distributed to Tenneco's common stockholders, is a specialty and protective packaging company with $2.8 billion in 1998 revenues.
Under the terms of the offers and solicitations, Tenneco Inc. will tender for any and all of certain of its outstanding notes and debentures totaling $1.28 billion in principal amount. Simultaneously, Tenneco Inc. will exchange any and all of $1.18 billion in principal amount of certain of its outstanding notes and debentures for up to $1.18 billion of new notes and debentures to be issued by Tenneco Packaging. Concurrent with the tender and exchange offers, Tenneco will conduct a consent solicitation to eliminate the restrictive covenants in the related indenture. Consents from the holders of a simple majority of the outstanding securities voting together as one class are required in order to amend the indenture. A summary of the tenders, exchanges and related consent solicitations is given below.
Each of the tender offers and exchange offers will expire at 5:00 p.m., New York City time, on November 3, 1999, unless extended or earlier terminated. The consent solicitations will expire at 5:00 p.m., New York City time, on October 20, 1999, unless extended or earlier terminated.
In respect of the cash tender offers, investors who validly tender their securities before the consent solicitations expire will receive cash consideration, which includes an early tender premium. Investors validly tendering after the consent solicitations expire, but before the applicable tender offer expires, will receive cash consideration that excludes the early tender premium.
In respect of the exchange offers, investors who validly tender for exchange before the consent solicitations expire will receive $1,000 principal amount of Tenneco Packaging securities for each $1,000 principal amount of Tenneco Inc. securities tendered for exchange. Investors who validly tender for exchange after the consent solicitations expire, but before the applicable exchange offer expires, will receive $980 principal amount of Tenneco Packaging securities for each $1,000 principal amount of Tenneco Inc. securities tendered for exchange. Investors who receive $980 principal amount of Tenneco Packaging securities for each $1,000 principal amount of Tenneco Inc. securities may also be entitled to receive a single security with a principal amount that is less than $1,000. Since Tenneco Packaging will only issue new securities with principal amounts of $1,000 or integral multiples thereof, the principal amount of such fractional securities will be repaid directly in cash, concurrently with settlement of the exchange offers.
After the conclusion of the tender offers, exchange offers and consent solicitations, securities that are not tendered or exchanged will continue to be obligations of Tenneco Automotive. These securities will not enjoy the protection of the restrictive covenants in the related indenture and will be structurally subordinated to certain other senior secured and senior subordinated financings that are expected to aggregate $1.7 billion.
Securities Selected For Tender
The consideration for securities properly tendered and accepted for cash payment will be determined in accordance with the procedures described in the tender offer documents, generally using a yield to maturity equal to the sum of the yield to maturity on the applicable United States Treasury reference security and the applicable fixed spread as specified in the tender offer documents. The reference security yield to maturity will be based on a bid price for that security on November 1, 1999, at 12:00 noon New York City time, unless Tenneco extends or terminates the offers.
The table below lists specific details.
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Cusip Outstanding Maturity Coupon
Face Value Date
(millions)
-----------------------------------------------------
88037EAC5 $488.245 01-Oct-02 8.075%
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88037EAE1 $148.851 15-Nov-12 9.200%
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88037EAF8 $175.839 01-Feb-01 10.075%
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88037EAG6 $223.612 15-Mar-08 10.200%
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Reference Security Reference Fixed Spread Early Tender
Page Premium per
$1,000 of Notes
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5.75% due 10/02 BBT5 0.50% $10.00
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6.00% due 8/09 BBT1 0.95% $25.00
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5.375% due 2/01 BBT4 0.45% $ 5.00
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6.00% due 8/09 BBT1 0.80% $20.00
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Separately, the cash consideration for $246.817 million principal amount of 8.20% notes due 11/15/1999 (cusip 88037EAD3) has been determined as $1,003 per $1,000 principal amount of notes properly tendered and accepted for payment, inclusive of an early tender premium of $5.00 per note. Investors who tender before the related consent solicitation expires will receive the purchase price plus the early tender premium which will equal $1,003 per $1,000 principal amount of notes properly tendered and accepted for payment. Investors who tender after the related consent solicitation expires but before the tender offer expires will not receive the early tender premium.
Accrued and unpaid interest will be paid up to, but excluding, the settlement date of the tender offers.
Securities Selected For Exchange
Investors who exchange securities of Tenneco Inc. for new securities of Tenneco Packaging will receive a new security that has a maturity date and early redemption terms (where applicable) that are identical to those in the Tenneco Inc. security exchanged. However, the coupon on each of the Tenneco Packaging securities will be adjusted upward and will result in a rate of interest that is 0.50% higher than that previously payable by Tenneco Inc. In all other respects, the terms of the Tenneco Packaging securities will be substantially the same as the securities previously issued by Tenneco Inc.
Accrued and unpaid interest calculated on the principal amount of Tenneco Inc. securities that are exchanged will be paid through the date that Tenneco Inc. accepts the exchange offers. As a result of the payment of accrued interest, each new Tenneco Packaging security will have a short first interest payment period that runs from the settlement date of the exchange offer to the next scheduled interest payment date.
The table below provides details of the exchange offers.
Existing Tenneco Inc. Securities
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Old Cusip Outstanding Maturity Old Coupon
Face Value Date
(millions)
----------------------------------------------------
88037EAA9 $299.690 15-Dec-05 6.700%
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88037EAB7 $276.794 15-Dec-25 7.450%
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88037OBQ3 $100.000 15-Apr-07 7.500%
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88037EAH4 $300.000 15-Jun-17 7.625%
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88037OBR1 $200.000 15-Apr-27 7.875%
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New Tenneco Packaging Securities
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Maturity New Coupon
Date
-------------------------
15-Dec-05 7.20%
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15-Dec-25 7.95%
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15-Apr-07 8.00%
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15-Jun-17 8.125%
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15-Apr-27 8.375%
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Morgan Stanley Dean Witter and Credit Suisse First Boston are acting as dealer managers for the tender offers, exchange offers and consent solicitations; Georgeson Shareholder Communications Inc. is acting as Information Agent and The Chase Manhattan Bank is the Depositary and Exchange Agent.
Questions regarding the offers should be directed to Morgan Stanley Dean Witter on 800-624-1808 or Credit Suisse First Boston on 800-820-1653. Requests for documentation should only be directed to Georgeson Shareholder Communications Inc. Banks and brokers should call collect on 212-440-9800; all others should call toll free on 800-223-2064.
The summary of the tender offers, exchange offers and consent solicitations provided above are in all respects qualified by reference to, and is subject to the terms and conditions set forth, in the tender offer documents and exchange offer documents.
The cash tender offers and related consent solicitations are being made only by means of the Offer to Purchase and Consent Solicitation Statement dated October 5, 1999. The exchange offers and related consent solicitations are only being made by means of the Prospectus and Consent Solicitation dated October 5, 1999. This communication is neither an offer to sell nor a solicitation of an offer to buy any security.
Tenneco is a $6 billion manufacturing company headquartered in Greenwich, Conn., with 38,000 employees worldwide. Tenneco Automotive is one of the world's largest producers and marketers of ride control and exhaust systems and products, which are sold under the Monroe(R) and Walker(R) global brand names. Among its products are Sensa-Trac(R) shocks and struts, Rancho(R) shock absorbers, Walker(R) Quiet-Flow(TM) mufflers and DynoMax(TM) performance exhaust products, and Monroe(R) Clevite(TM) vibration control components. Tenneco Packaging is among the world's leading and most diversified packaging companies. Among its products are Hefty(R) trash bags, Hefty OneZip(R) and Baggies(R) food storage bags, E-Z Foil(R) single-use aluminum cookware and Hexacomb(R) paper honeycomb products.