NON-US EXCHANGE OFFER RESULTS ANNOUNCEMENT AND US EXCHANGE OFFER EARLY TENDER DEADLINE UPDATE

RNS Number : 8997C
Lloyds Banking Group PLC
23 November 2009
 























110/09    23 November 2009

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES OR TO ANY PERSON LOCATED OR
RESIDENT IN THE REPUBLIC OF ITALY 




NON-US EXCHANGE OFFER RESULTS ANNOUNCEMENT AND US EXCHANGE OFFER EARLY TENDER
DEADLINE UPDATE 

On 3 November 2009, Lloyds Banking Group plc ("Lloyds Banking Group") announced
its Non-US Exchange Offer, pursuant to which it invited Holders of certain
Existing Securities to Offer to Exchange their Existing Securities for an
aggregate of £7.0 billion of Enhanced Capital Notes or an aggregate Exchange
Consideration Amount equivalent to £1.5 billion. Lloyds Banking Group hereby
announces the results of the Non-US Exchange Offer, the level of Offers to
Exchange received by the Exchange Agents pursuant to the US Exchange Offer as
at the Early Tender Deadline and an increase to the Maximum ECN New Issue
Amount under the US Exchange Offer. 




Non-US Exchange Offer Results




Overview

Following the expiration of the Exchange Offer Period on 20 November 2009,
Lloyds Banking Group is pleased to announce the results of the Non-US Exchange
Offer: 




Following strong investor demand, Offers to Exchange £12.51 billion in
principal amount of Existing Securities were received by the Exchange Agent, of
which £8.78 billion have been accepted. 




An aggregate amount of £1.48 billion of Exchange Consideration will be issued
in the form of New Shares, in certain limited circumstances, Additional ECNs
and/or paid in cash on the Late Settlement Date, compared to the Maximum
Exchange Consideration Amount of £1.5 billion. 




The ECN Issuers will issue an aggregate principal amount of ECNs on the Early
Settlement Date equivalent to £6.99 billion, compared to the Maximum ECN New
Issue Amount of £7.0 billion. 




Lloyds Banking Group and the ECN Issuers have accepted in full all valid Offers
to Exchange in respect of all series and classes of Existing Securities up to
and including the class of preference shares ranking in position 15 pursuant to
the ECA Priority. 




Lloyds Banking Group and the ECN Issuers have accepted in full all valid Offers
to Exchange in respect of all series and classes of Existing Securities up to
and including the class of preference shares ranking in position 30 pursuant to
the ECN Priority. Series 31 was accepted on a pro rata basis by the application
of a factor equal to 0.105338. 




The detailed results of the Non-US Exchange Offer are set out below. The table
includes information such as the relevant Principal Amount/Liquidation
Preference accepted pursuant to the Exchange Priorities. The table also
incorporates the Allocation Type (ECN, ECA, both or none) which a Holder may
receive, if accepted, based upon its submission into one of the four Exchange
Options, the ranking of the relevant Existing Securities in the Exchange
Priorities and the final amounts accepted by Lloyds Banking Group and the ECN
Issuers. 


PLEASE SEE ATTACHMENT



* Offers to Exchange specifying Exchange Option 3 which were pro rated as a
result of reaching the Maximum ECN New Issue Amount and which constitute Option
3 Residual Offers, have been applied to the ECA Priority in accordance with the
ranking of the relative Existing Securities. 




Offers to Exchange accepted pursuant to the ECA Priority

Lloyds Banking Group and the ECN Issuers have accepted in full all valid Offers
to Exchange in respect of those Existing Securities which have amounts listed
in the columns "ECA - Principal Amount/Liquidation Preference Accepted" and
"ECA - Aggregate Exchange Consideration Amount" corresponding to such Existing
Securities in the table above for the relevant Exchange Consideration Amount.
If no amount is listed in the columns "ECA - Principal Amount/Liquidation
Preference Accepted" and "ECA - Aggregate Exchange Consideration Amount"
corresponding to any Existing Securities in the table above, the relevant
Existing Securities will not be exchanged for the relevant Exchange
Consideration Amount. The aggregate Exchange Consideration Amount will be
equivalent to £1.48 billion (compared to a Maximum Exchange Consideration
Amount of £1.5 billion). 




A Holder will receive an Exchange Consideration Amount payable in New Shares
and/or cash in an amount, per £1,000, €1,000, US$1,000 or ¥1,000 (as
applicable) of its Existing Securities accepted for exchange pursuant to the
ECA Priority, equal to the relevant Exchange Consideration Amount, as specified
in Part III of the Non-US Exchange Offer Memorandum, or, in certain limited
circumstances, Additional ECNs on a par-for-par basis. 




The New Shares, cash and/or, in the applicable limited circumstances, the
Additional ECNs, together with any Accrued Interest Payments and Accrued
Dividends Payments in respect of Existing Securities accepted for exchange
pursuant to the ECA Priority, are expected to be issued or paid (as the case
may be) on the Late Settlement Date, being 18 February 2010. Lloyds Banking
Group will, on or around 12 February 2010, announce, amongst others, the New
Shares Price and whether Holders whose Offers to Exchange have been accepted
for the relevant Exchange Consideration Amount, will receive New Shares, cash
and/or in certain limited circumstances Additional ECNs, as more particularly
set out in the Non-US Exchange Offer Memorandum. 




Offers to Exchange accepted pursuant to the ECN Priority

Lloyds Banking Group and the ECN Issuers have accepted all valid Offers to
Exchange in respect of the Existing Securities which have an amount listed in
the column "ECNs - Principal Amount/Liquidation Preference Accepted and New
Issue Amount" corresponding to such Existing Securities in the table above for
ECNs. If no amount is listed in the column "ECNs - Principal Amount/Liquidation
Preference Accepted and New Issue Amount" corresponding to any Existing
Securities in the table above the relevant Existing Securities will not be
exchanged for ECNs. The Lloyds TSB Bank plc £700,022,000 13.00 per cent.
Sterling Step-up Perpetual Capital Securities (ISIN: XS0408620721) were
accepted for exchange on a pro rata basis, as further detailed below. The
aggregate principal amount of ECNs to be issued by the ECN Issuers will be
equivalent to £6.99 billion (compared to the Maximum ECN New Issue Amount of
£7.0 billion, which was increased from £5.5 billion by Lloyds Banking Group on
11 November 2009 following high levels of investor interest). 




Save as noted immediately below, the ECNs are expected to be issued, and any
Accrued Interest Payments and Accrued Dividends Payments in respect of Existing
Securities accepted for exchange pursuant to the ECN Priority, are expected to
be made, on the Early Settlement Date, being 1 December 2009. 




Holders of Existing Securities held through CREST and who do not have access to
a securities account with Euroclear or Clearstream, Luxembourg, and who will
receive any ECNs to which they have become entitled in the form of CREST
Depositary Interests ("CDIs") through CREST, may receive such ECNs and any
Accrued Interest Payments or Accrued Dividends Payments after the Early
Settlement Date, as noted in the announcement made by Lloyds Banking Group on
12 November 2009. 




General

Exchange Options 3 and 4: In accordance with the operation of the Exchange
Priorities described in Appendix 3 to the Non-US Exchange Offer Memorandum, the
ECA Priority was re-run in Step 3. Consequently (i) any Offers to Exchange
Existing Securities specifying Exchange Option 4 which were not accepted
pursuant to the ECA Priority did not participate in the ECN Priority; and (ii)
any valid Offers to Exchange specifying Exchange Option 3 which were not
accepted pursuant to the ECN Priority had the opportunity to participate in the
ECA Priority. 




Scaling of Offers to Exchange: Save as specified in the following sentence, all
Offers to Exchange which have been accepted were accepted in full and no
scaling factor was applied when accepting such Offers to Exchange. Existing
Securities accepted for exchange pursuant to the ECN Priority and belonging to
the Lloyds TSB Bank plc £700,022,000 13.00 per cent. Sterling Step-up Perpetual
Capital Securities (ISIN: XS0408620721) were scaled in the ECN Priority by a
factor of 0.105338. 




Retail Participation in the Exchange Offer: The Group values the fact that it
has one of the largest retail preference shareholder bases in the UK. It has
sought to structure the Non-US Exchange Offer to enable the vast majority of
such individuals to participate, including an amendment to the terms of the
Non-US Exchange Offer to allow ECNs to settle through CREST in the form of
CREST Depositary Interests, or "CDIs", as announced by Lloyds Banking Group on
12 November 2009. 




Retail Holdings Offer: In addition to the above, and as mentioned in the Non-US
Exchange Offer Memorandum, the Group intends to invite Eligible Retail Holders
to participate in the Retail Holdings Offer. Subject to certain resolutions
being passed at the General Meeting on 26 November 2009, the Group will write
to each Eligible Retail Holder with details of this offer and of how to
participate in it. The Group intends to write to such holders in the first half
of December and for the offer to remain open until mid January to allow them
sufficient time to participate. 




US Exchange Offer - Offers to Exchange received at the Early Tender Deadline




Further to the announcement on 3 November 2009, pursuant to which Lloyds
Banking Group invited Holders of six series of certain Existing Securities to
Offer to Exchange their Existing Securities for Enhanced Capital Notes, Lloyds
Banking Group hereby announces the expiration of the Early Tender Deadline for
the US Exchange Offer. The Early Tender Deadline was 5.00 p.m. (New York City
time) on 20 November 2009. 




As at the Early Tender Deadline, Lucid and DF King had received Offers to
Exchange the Existing Securities which are subject to the US Exchange Offer as
follows: 





Rank Title of Existing Securities Principal Amount Offered for Exchange at
Early Tender Deadline 
1 HBOS plc US$1,000,000,000 5.375% Undated Fixed to Floating Rate Subordinated
Notes 
US4041A2AG96 (144A) / US4041A3AF96 (Reg S) US$985,778,000 
2 HBOS Capital Funding No.2 L.P. US$750,000,000 6.071% Non-voting
Non-cumulative Perpetual Preferred Securities 
USG43648AA57 (Reg S) / US40411CAA09 (144A) US$623,973,000 
3 Bank of Scotland plc US$250,000,000 Undated Floating Rate Primary Capital
Notes 
GB0000765403 US$185,700,000 
4 Lloyds TSB Bank plc US$500,000,000 Primary Capital Undated Floating Rate
Notes (Series 2) 
GB0005205751 US$163,240,000 
5 Lloyds TSB Bank plc US$750,000,000 Primary Capital Undated Floating Rate
Notes (Series 1) 
GB0005224307 US$477,480,000 
6 Lloyds TSB Bank plc US$600,000,000 Primary Capital Undated Floating Rate Notes
GB0005232391 US$228,620,000 
  Total US$2,664,791,000 

 

Increase in Maximum ECN New Issue Amount under the US Exchange Offer;
Withdrawal Deadline 




Lloyds Banking Group hereby announces an increase in the Maximum ECN New Issue
Amount from US$800,000,000 to US$985,636,000. Neither the Withdrawal Deadline
nor the withdrawal rights have been extended as a result of this increase for
the HBOS plc US$1,000,000,000 5.375% Undated Fixed to Floating Rate
Subordinated Notes. However, for the other Existing Securities which are
subject to the US Exchange Offer, the Withdrawal Deadline and withdrawal rights
are hereby being extended through to the expiration of the US Exchange Offer. 




The US Exchange Offer will expire at 12.00 a.m. midnight (New York City time)
on 7 December 2009. Lloyds Banking Group will make a further announcement on 8
December 2009 to announce the final results of the US Exchange Offer by 9.00
a.m. (London time). 




Capitalised terms used, but not otherwise defined in this announcement, shall
have the meanings given to them in the Exchange Offer Memoranda dated 3
November 2009 relating to the Exchange Offers. 




For further information:




Investor Relations

Michael Oliver                                                                 
                  +44 (0) 20 7356 2167 
Director of Investor Relations
Email: michael.oliver@ltsb-finance.co.uk




Moira d'Arcy                                                                   
                   +44 (0) 20 7356 2164 
Head of Debt Investor Relations
Email: moira.d'arcy@ltsb-finance.co.uk




Media Relations




Sara Evans                                                                     
                  +44 (0) 20 7356 2075 
Media Relations Manager
Email: sara.evans2@lloydstsb.co.uk

 
 
In addition, requests for information in relation to the Non-US Exchange Offer
may be directed to: 




JOINT GLOBAL CO-ORDINATORS, JOINT SPONSORS, LEAD DEALER MANAGERS AND JOINT
STRUCTURING ADVISERS 
 
Merrill Lynch International
Merrill Lynch Financial Centre
2 King Edward Street
London EC1A 1HQ
United Kingdom
 UBS Limited
1 Finsbury Avenue
London EC2M 2PP
United Kingdom
 
Tel: +44 20 7995 3715
Fax: +44 20 7995 8582 
Attention: Liability Management -
John Cavanagh 
email: john.m.cavanagh@baml.com
 Tel: +44 20 7567 0525 
Fax: +44 20 7568 5332 
Attention: Liability Management Group 
email: OL-Lloyds-Exchange@ubs.com
 


The other Dealer Managers and the Exchange Agent in connection with the Non-US
Exchange Offer are: 




DEALER MANAGERS
 
Citigroup Global Markets Limited
Citigroup Centre
Canada Square
Canary Wharf
London E14 5LB
United Kingdom
 Goldman Sachs International
Peterborough Court
133 Fleet Street
London EC4A 2BB
United Kingdom
 
Tel: +44 20 7986 8969
Attention: Liability Management
Graham Bahan
email: liabilitymanagement.europe@citi.com
 Tel: +44 20 7552 9912
Fax: +44 20 7774 4477
Attention: European Fixed Income Syndicate
Oliver Sedgwick
email: oliver.sedgwick@gs.com
 
HSBC Bank plc
8 Canada Square
London E14 5HQ
United Kingdom
 J.P. Morgan Securities Ltd.
125 London Wall
London EC2Y 5AJ
United Kingdom
 
Tel: +44 20 7991 5874
Attention: Liability Management - Andrew Montgomery
email: liability.management@hsbcib.com
 Tel: +44 20 7779 2468
Attention: FIG Syndicate - Richard Howard
email: richard.v.howard@jpmorgan.com
 
EXCHANGE AGENT
 
Lucid Issuer Services Limited
436 Essex Road
London N1 3QP
United Kingdom
 
Tel: +44 20 7704 0880 
Fax: +44 20 7067 9098 
Attention: Sunjeeve Patel, Lee Pellicci, Yves Theis, David Shilson 
email: lbg@lucid-is.com
 




DISCLAIMER

This announcement must be read in conjunction with the exchange offer
memorandum for the Non-US Exchange Offer dated 3 November 2009 (the "Non-US
Exchange Offer Memorandum") and with the exchange offer memorandum for the US
Exchange Offer dated 3 November 2009 (the "US Exchange Offer Memorandum", and
together with the Non-US Exchange Offer Memorandum, the "Exchange Offer
Memoranda"). This announcement and the Exchange Offer Memoranda contain
important information which must be read carefully before any decision is made
with respect to the respective Exchange Offers. If any Holder is in any doubt
as to the action it should take, it is recommended to seek its own legal, tax,
financial and accounting advice, including as to any tax consequences, from its
stockbroker, bank manager, solicitor, accountant or other independent financial
adviser. Any individual or company whose Existing Securities are held on its
behalf by a broker, dealer, bank, custodian, trust company, or other nominee
must contact such entity if it wishes to participate in the relevant Exchange
Offer. None of the Dealer Managers, the Exchange Agents, the ECN Trustee, or
any person who controls, or is a director, officer, employee or agent of such
persons, or any affiliate of such persons, makes any recommendation as to
whether Holders should participate in the Exchange Offers. No offer or
invitation to acquire or exchange any securities is being made pursuant to this
announcement. Neither this announcement nor the Exchange Offer Memoranda
constitute an invitation to participate in the Exchange Offers in any
jurisdiction in which, or to or from any person to or from whom, it is unlawful
to make such invitation under applicable securities laws and offers of Existing
Securities for exchange pursuant to the Exchange Offers will not be accepted
from Holders in any jurisdiction where such invitation is unlawful. 

The distribution of this announcement and the Exchange Offer Memoranda in
certain jurisdictions may be restricted by law. Persons into whose possession
this announcement and/or the Exchange Offer Memoranda come are required by each
of the ECN Issuers, Lloyds Banking Group, the Dealer Managers and the Exchange
Agents to inform themselves about, and to observe, any such restrictions. 




OFFER RESTRICTIONS




European Economic Area

This announcement and the Exchange Offer Memoranda have been prepared on the
basis that the Exchange Offers will either be made pursuant to an exemption
under the Prospectus Directive, as implemented in Member States of the EEA,
from the requirement to produce a prospectus for offers of the ECNs or (in the
case of the Non-US Exchange Offer only) the relevant Exchange Consideration, or
(in the case of the Non-US Exchange Offer only) by the use of the Non-US
Exchange Offer Memorandum, as a prospectus approved by the UKLA and prepared in
accordance with the Prospectus Directive and the Prospectus Rules made under
section 73A of FSMA and passported to the EEA Permitted Jurisdictions.
Accordingly, any person making or intending to make an Offer to Exchange
pursuant to the Non-US Exchange Offer within the EEA should only do so in the
EEA Permitted Jurisdictions using the Non-US Exchange Offer Memorandum, or, in
any other EEA jurisdiction, in circumstances in which no obligation arises for
the ECN Issuers, Lloyds Banking Group or any of the Dealer Managers to produce
a prospectus for such offer. 




United States

The Non-US Exchange Offer is not being made, and will not be made, directly or
indirectly, in or into, or by use of the mail of, or by any means or
instrumentality of interstate or foreign commerce of or of any facilities of a
national securities exchange of, the United States or to, or for the account or
benefit of, US persons. This includes, but is not limited to, facsimile
transmission, electronic mail, telex, telephone and the internet. Accordingly,
copies of this announcement, the Non-US Exchange Offer Memorandum and any other
documents or materials relating to the Non-US Exchange Offer are not being, and
must not be, directly or indirectly, mailed or otherwise transmitted,
distributed or forwarded (including, without limitation, by custodians,
nominees or trustees) in or into the United States or to US persons and the
Existing Securities for the Non-US Exchange Offer cannot be Offered for
Exchange by any such use, means, instruments or facilities or from within the
United States or by US persons. Any purported Offer to Exchange such Existing
Securities resulting directly or indirectly from a violation of these
restrictions will be invalid, and any purported Offer to Exchange made by a US
person, a resident of the United States or from the United States or from any
agent, fiduciary or other intermediary acting on a nondiscretionary basis for a
principal giving instructions from within the United States or for a US person
will be invalid and will not be accepted. 




Each Holder of Existing Securities participating in the Non-US Exchange Offer
will represent that it is not a US person and is participating in the Non-US
Exchange Offer in accordance with Regulation S under the Securities Act and
that it is not participating in the Non-US Exchange Offer from the United
States nor is it a US person or an agent, fiduciary or other intermediary
acting on a non-discretionary basis for a principal giving instructions from
within the United States or for a US person. The purpose of this announcement
and the Non-US Exchange Offer Memorandum is limited to the Non-US Exchange
Offer, and neither this announcement nor the Non-US Exchange Offer Memorandum
may be sent or given to any person other than in an offshore transaction in
accordance with Regulation S under the Securities Act. 




This announcement does not constitute an offer of securities for sale in the
United States or to US persons. The New Securities being offered in the
relevant Exchange Offer have not been, and will not be, registered under the
Securities Act or the securities laws of any state or jurisdiction of the
United States, and may not be offered, sold or delivered, directly or
indirectly, in the United States or to, or for the account or benefit of, US
persons. There will be no public offering of securities in the United States. 




Italy

This announcement and the Exchange Offers are not being made in the Republic of
Italy. The Exchange Offers, this announcement and the Exchange Offer Memoranda
have not been submitted to the clearance procedure of the Commissione Nazionale
per le Societa e la Borsa (''CONSOB'') pursuant to Italian laws and
regulations. Accordingly, the Exchange Offers are not made or made available to
holders of Existing Securities who are Italian residents and/or persons located
in the Republic of Italy and they may not submit acceptances relating to
Existing Securities in respect of the Exchange Offers and, as such, any
acceptances received from or on behalf of such Holders of Existing Securities
shall be ineffective and void. Neither the Exchange Offer Memoranda nor any
other information material relating to the Exchange Offers or the Existing
Securities may be distributed or made available in the Republic of Italy. 




Belgium

Neither this announcement, the Exchange Offer Memoranda nor any other offering
material has been submitted or will be submitted for approval or recognition to
the Belgian Banking, Finance and Insurance Commission (''Commission bancaire,
financière et des assurances/Commissie voor het Bank-, Financie- en
Assurantiewezen''). The Exchange Offers may not be made in Belgium by way of a
public offering, as defined in Articles 3 and 6 of the Belgian Law of 1 April
2007 on public takeover bids or as defined in Article 3 of the Belgian Law of
16 June 2006 on the public offer of placement instruments and the admission to
trading of placement instruments on regulated markets (the ''Belgian Public
Offer Law''), each as amended or replaced from time to time. Accordingly, the
Exchange Offers may not be advertised and the Exchange Offers will not be
extended and no Exchange Offer Memorandum, other memorandum, information
circular, brochure or any similar document has or will be distributed, directly
or indirectly, to any person in Belgium other than ''qualified investors'' in
the meaning of Article 10 of the Belgian Public Offer Law (as amended from time
to time). This announcement and the Exchange Offer Memoranda have been issued
only for the personal use of the above qualified investors and exclusively for
the purpose of the Exchange Offers. Accordingly, the information contained
herein and in the Exchange Offer Memoranda, may not be used for any other
purpose or disclosed to any other person in Belgium. 




General

The Dealer Managers, the Registrars and the Exchange Agents (and their
respective directors, employees or affiliates) make no representations or
recommendations whatsoever regarding this document or the Exchange Offers. The
Exchange Agents are the agents of the ECN Issuers and Lloyds Banking Group and
owe no duty to any Holder. None of Lloyds Banking Group, the ECN Issuers, the
Dealer Managers, the Registrars or the Exchange Agents makes any recommendation
as to whether or not Holders should participate in the Exchange Offers. 




The Exchange Offers do not constitute an offer to buy or the solicitation of an
offer to sell the Existing Securities and/or the New Securities in the relevant
Exchange Offer in any circumstances in which such offer or solicitation is
unlawful. In those jurisdictions where the securities or other laws require the
Exchange Offers to be made by a licensed broker or dealer and either of the
Dealer Managers or any of their respective affiliates is such a licensed broker
or dealer in that jurisdiction, the Exchange Offers shall be deemed to be made
on behalf of Lloyds Banking Group and the ECN Issuers by such Dealer Manager or
affiliate (as the case may be) in such jurisdiction. 




- END -










FORWARD LOOKING STATEMENTS

This announcement contains forward looking statements with respect to the
business, strategy and plans of the Lloyds Banking Group, its current goals and
expectations relating to its future financial condition and performance. By
their nature, forward looking statements involve risk and uncertainty because
they relate to events and depend on circumstances that will occur in the
future. The Group's actual future results may differ materially from the
results expressed or implied in these forward looking statements as a result of
a variety of factors, including UK domestic and global economic and business
conditions, the ability to derive cost savings and other benefits as well as to
mitigate exposures from the acquisition and integration of HBOS, risks
concerning borrower quality, market related trends and developments, changing
demographic trends, changes in customer preferences, changes to regulation, the
policies and actions of governmental and regulatory authorities in the UK or
jurisdictions outside the UK, including other European countries and the US,
exposure to regulatory scrutiny, legal proceedings or complaints, competition
and other factors. Please refer to the latest Annual Report on Form 20-F filed
with the US Securities and Exchange Commission for a discussion of such
factors. The forward looking statements contained in this announcement are made
as at the date of this announcement, and the Group undertakes no obligation to
update any of its forward looking statements. 





This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
MSCCKNKNABDKKDB
To unsubscribe from alerts, please visit Lloyds Banking Group PLC's website.