FedEx on June 25 launched cash tender offers for a wide slate of outstanding notes, with the company saying the total purchase price, excluding accrued interest, will not exceed $4.15 billion.
The move follows FedEx’s June 1 spin-off of FedEx Freight, in which FedEx distributed 80.1% of FedEx Freight’s common stock to FedEx shareholders. FedEx Freight also paid FedEx a cash dividend of about $4.1 billion, and FedEx said that money, along with cash on hand, will fund the buyback.
The tender offer covers 19 note series, with acceptance structured by priority level and subject to the $4.15 billion cap. The largest blocks of debt outstanding include $1.007 billion of 4.550% notes due 2046, $1.048 billion of 5.250% notes due 2050, $913.4 million of 4.750% notes due 2045, $743.4 million of 4.050% notes due 2048, and $696.5 million of 4.950% notes due 2048.
At the other end, FedEx has just $36.96 million of one 4.500% 2065 note series outstanding, and $55.4 million of 3.875% notes due 2042 in one tranche.
FedEx set an early tender deadline of July 9, with an expiration date of July 24. Holders who tender by the early deadline are eligible for an additional $30 per $1,000 principal amount across the series. Settlement for early tenders is expected July 14, while final settlement is expected July 28.
The offer prices are tied to Treasury benchmarks and fixed spreads ranging from 15 basis points to 110 basis points, depending on the series. The tightest spread in the table is 15 basis points on the 2028 notes; the widest is 110 basis points on the 2065 notes.
FedEx said the offers are designed to reduce outstanding indebtedness and keep leverage neutral after the Freight spin-off. Today the company's shares have moved 2.8% to a price of $325.70. For more information, read the company's full 8-K submission here.
