Humana has launched cash offers to repurchase up to $1.5 billion of its outstanding notes. The offers cover eight bond issues maturing between 2027 and 2032, with a stated acceptance order and a separate limit on how much of one issue can be bought.
The offers are subject to their terms and may be prorated if valid tenders exceed the amounts Humana will accept.
Key details
- Overall limit: Humana may spend up to $1.5 billion to buy the notes, excluding accrued coupon payments.
- Acceptance order: The notes are ranked for acceptance in this order:
- 2.150% notes due 2032
- 3.125% notes due 2029
- 3.700% notes due 2029
- 4.875% notes due 2030
- 1.350% notes due 2027
- 3.950% notes due 2027
- 5.375% notes due 2031
- 5.750% notes due 2028
- Separate limit on 2031 notes: Humana will accept no more than $800 million in principal of its 5.375% notes due 2031. That issue may also be prorated under the overall acceptance rules.
- Pricing: The offers use prices determined by reference to U.S. Treasury securities plus fixed spreads. The release lists spreads of 50 basis points for the 2.150% notes due 2032 and 40 basis points for the 3.125% notes due 2029.
- Proration and flexibility: If tenders exceed the amount Humana can accept for an issue, accepted amounts may be reduced proportionately. Humana also reserves the ability, subject to the offer terms, to change the overall or 2031-note limits.
Plain-English implications
If completed, the tenders would reduce Humana’s outstanding debt by the principal amount of notes it accepts. The priority order means higher-ranked issues are considered ahead of lower-ranked ones when applying the offer limits; acceptance of lower-ranked notes may therefore depend on how much is accepted from higher-ranked issues.