The Charles Schwab Corporation Announces Pricing of Previously Announced Exchange Offer

Wednesday, August 22, 2012 9:35 am PDT

Dateline:

SAN FRANCISCO

Public Company Information:

NYSE:
SCHW

SAN FRANCISCO--(BUSINESS WIRE)--The Charles Schwab Corporation (the “Company”) announced today the pricing terms of its offer to certain eligible holders of its outstanding 4.950% senior notes due 2014 (CUSIP No. 808513AC9) (“Old Notes”) to exchange the Old Notes for new senior notes due 2022 (“New Notes”) and cash (“Exchange Offer”). The complete terms of the Exchange Offer are set forth in a confidential offering memorandum and related letter of transmittal, each as amended to date. The Company also announced that it will pay interest on the New Notes at a rate per annum equal to 3.225%, as calculated in accordance with the confidential offering memorandum.

The table below indicates, among other things, the Total Exchange Price for each $1,000 principal amount of Old Notes that were validly tendered for exchange and not validly withdrawn on or prior to 5:00 p.m., New York City time, on August 21, 2012 (the “Early Participation Date”) and accepted by the Company for payment pursuant to the Exchange Offer (as calculated pursuant to the confidential offering memorandum):

 

Exchange Offer Summary Table

 

            Total Exchange Price2,3

CUSIP
Number

 

Title of
Security

 

Reference
U.S. Treasury
Security for
the Old Notes

 

Fixed Spread
(basis
points)

 

Yield Used
to Determine
Total
Exchange
Price1

 

Early
Participation
Payment2

 

Principal
Amount New
Notes

 

Total Cash
Consideration3

808513AC9

4.950%
Senior Notes
due 2014

0.25% UST
Note due
05/31/2014

37.5 0.649% $30 $1,000   $75.18
1  

The yield equals the bid-side yield on the Reference U.S. Treasury Security plus the Fixed Spread.

2 To be paid in $1,000 principal amount of New Notes and cash per $1,000 principal amount of Old Notes accepted for exchange by the Company.
3 Does not reflect accrued and unpaid interest.
 

The Total Exchange Price includes an Early Participation Payment of $30 per $1,000 principal amount of Old Notes. Settlement for Old Notes validly tendered and not validly withdrawn on or prior to the Early Participation Date and accepted by the Company is expected to be August 27, 2012, the fourth business day after the Early Participation Date (the “Early Settlement Date”).

The Exchange Offer will expire at midnight, New York City time, on August 28, 2012, unless extended by the Company (“Expiration Date”). Eligible Holders (as defined below) who validly tender their Old Notes after the Early Participation Date but on or prior to the Expiration Date will receive, on August 29, 2012 (the “Final Settlement Date”), the Total Exchange Price less the Early Participation Payment. Tenders of Old Notes in the Exchange Offer may no longer be withdrawn unless required by law.

Consummation of the Exchange Offer on the Early Settlement Date is subject to certain conditions, including the requirements that (i) a minimum of $250 million aggregate principal amount of Old Notes will have been validly tendered and not validly withdrawn on or prior to the Early Participation Date, and (ii) the yield on the 1.75% U.S. Treasury Note due May 15, 2022 is not more than 3.80% or less than 1.25% on the Price Determination Date. According to information provided by Global Bondholder Services Corporation, the exchange agent for the Exchange Offer, approximately $256 million in aggregate principal amount of Old Notes were validly tendered and not validly withdrawn on or prior to the Early Participation Date. Consummation of the Exchange Offer on the Final Settlement Date is subject to certain conditions, including the requirement that the New Notes issued on the Final Settlement Date will be fungible for U.S. federal income tax purposes with the New Notes issued on the Early Settlement Date (the “Tax Fungibility Condition”). The Company may waive these or other conditions (other than the Tax Fungibility Condition) at its sole discretion.

Documents relating to the Exchange Offer will only be distributed to holders of the Old Notes that complete and return a letter of eligibility confirming that they are either (1) “Qualified Institutional Buyers” as defined in Rule 144A under the Securities Act of 1933, as amended (“Securities Act”) or (2) persons outside the United States who are not “U.S. persons” as defined in Regulation S under the Securities Act (“Eligible Holders”). Holders of the Old Notes that desire a copy of the eligibility letter may contact the information agent for the Exchange Offer, Global Bondholder Services Corporation, by calling (866) 488-1500 (toll-free) or (212) 430-3774.

This press release is not an offer to sell or a solicitation of an offer to buy any security. The Exchange Offer is being made solely by the confidential offering memorandum and related letter of transmittal and only to such persons and in such jurisdictions as is permitted under applicable law.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements include statements regarding the Exchange Offer and whether or not the Company will consummate the Exchange Offer. These forward-looking statements are subject to risks and uncertainties, including the risks disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

Contact:

Charles Schwab
MEDIA:
Greg Gable, 415-667-0473
INVESTORS/ANALYSTS:
Rich Fowler, 415-667-1841

Corporate Public Relations
Contacts for Journalists Only

 

888-767-5432

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