Bancolombia S.A. Accepts to Purchase All Tendered and Not Validly Withdrawn Offers of Bancolombia S.A.';s Outstanding 3.000% Senior Notes Due 2025 and 6.909% Subordinated Notes Due 2027

Rhea-AI Summary

Bancolombia S.A. announced its intention to purchase all tendered and not validly withdrawn 3.000% Senior Notes due 2025 and 6.909% Subordinated Notes due 2027. The total principal amounts respectively are US$267,421,000 and US$283,632,000. The early settlement date is expected to be June 24, 2024, while the final settlement date is anticipated on July 8, 2024. Holders of 2025 Notes validly tendered by June 14, 2024, will receive US$986.46 per US$1,000 principal amount, including an early tender payment of US$50. For 2027 Notes, holders will receive US$1,000 per US$1,000 principal amount. The offers expire on July 2, 2024.

Positive

• Bancolombia's commitment to purchase all tendered notes displays strong liquidity.
• Early settlement date set for June 24, 2024, shows prompt execution.
• The offer includes accrued and unpaid interest, providing additional value to noteholders.
• Validly tendered 2025 Notes receive US$986.46 per US$1,000 principal amount.
• Validly tendered 2027 Notes receive US$1,000 per US$1,000 principal amount.

Negative

• Significant financial outlay of over US$551 million for note purchases.
• Early tender payment deadline has already passed, potentially limiting value for late tenderers.
• Potential change in early and final settlement dates without notice introduces uncertainty.

Insights

Financial Analyst

Bancolombia’s decision to accept the tendered notes can offer several financial insights for investors. The acceptance of US$267,421,000 of 3.000% Senior Notes due 2025 and US$283,632,000 of 6.909% Subordinated Notes due 2027 suggests an effort to manage its debt profile effectively. By purchasing these notes early, Bancolombia may aim to reduce future interest obligations, given that market rates may be more favorable than the existing rates of 3.000% and 6.909%.

The fixed spread of T+0 for the 2025 notes indicates the yield on the notes is closely aligned with the U.S. Treasury, giving the bank the advantage of relatively low-cost refinancing. The total consideration of US$986.46 per US$1,000 principal for the 2025 Notes translates to a slight discount for Bancolombia, potentially lowering their financial liabilities.

For stakeholders, this move may bring short-term cash flow adjustments as the bank disburses funds to repurchase the notes. However, the long-term benefits could include improved financial stability and a potentially higher credit rating, which is favorable for borrowing costs. Investors should also consider the immediate financial impact on Bancolombia's cash reserves versus the strategic benefit of reducing high-interest debt.

Market Research Analyst

From a market perspective, Bancolombia’s actions might be seen as a positive strategic move. By taking advantage of the early tender period, the bank ensures they are capitalizing on current market conditions rather than waiting until the notes mature. This shows a proactive approach to financial management, which can be a confidence booster for shareholders and the market.

The total consideration for the 2027 Notes being US$1,000 per US$1,000 principal translates to no discount but offers a clear signal to the market of the bank’s robust liquidity position. The decision to accept all validly tendered offers might also be read as a move to clean up the balance sheet, making it more appealing to future investors.

Long-term implications may include enhanced investor confidence and a stronger market position, bolstered by the bank’s demonstration of financial prudence and strategic foresight. Potential drawbacks might be the immediate outflow of cash, affecting short-term liquidity.

MEDELLIN, Colombia, June 17, 2024 /PRNewswire/ -- Bancolombia S.A. (the "Bank") announces that it intends to accept for purchase all of the US$267,421,000 aggregate principal amount of the 3.000% Senior Notes due 2025 (the "2025 Notes" and such offer the "2025 Offer") and US$283,632,000 aggregate principal amount of the 6.909% Subordinated Notes due 2027 (the "2027 Notes" and collectively with the 2025 Notes, the "Notes", and such offer the "2027 Offer" and together with the 2025 Offer, the "Offers") all of the that have been validly tendered and not validly withdrawn for purchase on the early settlement date for the Offers (the "Early Settlement Date"), which is expected to be June 24, 2024. In addition to the applicable Total Consideration set forth in the Offer to Purchase dated June 3, 2024 (as it may be amended or supplemented from time to time, the "Offer to Purchase"), which includes the applicable Early Tender Payment, such Holders will also receive, in respect of such Notes, accrued and unpaid interest from the last interest payment date for the Notes to, but not including the Early Settlement Date. Payment for all Notes validly tendered and not validly withdrawn after the Early Tender Date and prior to July 2, 2024 and accepted for purchase by the Bank is expected to be made on July 8, 2024, the third business day following the Expiration Date or as promptly as practicable thereafter (the "Final Settlement Date"). However, the Early Settlement Date and the Final Settlement Date may change without notice.

Today, the Bank announced the Reference Yield and Total Consideration for the 2025 Offer upon the terms and subject to the conditions set forth in the Offer to Purchase. Holders of 2025 Notes validly tendered at or prior to June 14, 2024 (the "Early Tender Date), not validly withdrawn and accepted for purchase in accordance with the terms of the Offer to Purchase will receive on the Early Settlement Date, US$986.46 per US$1,000 principal amount of the 2025 Notes; calculated in accordance with the formula set forth in Schedule A to the Offer to Purchase, based on the fixed spread specified in the table below (the "Fixed Spread") for the 2025 Notes, plus the yield (the "Reference Yield") based on the bid-side price of the U.S. Treasury Security specified in the table below (the "Reference Treasury Security") as quoted on the Bloomberg reference page specified in the table below (the "Reference Page") as of 10:00 a.m. (New York City time) on June 17, 2024.

The table below summarizes certain payment terms of the Offers.

2025 Offer

Description of Notes	CUSIP/ ISIN Nos.	Outstanding Principal  Amount	Reference U.S. Treasury Security	Bloomberg Reference page	Reference Yield	Fixed Spread (basis points)(1)	Early Tender Payment(2)(3)	Total Consideration(1)(2)(4)
3.000% Senior Notes due 2025	05968L AM4/ US05968LAM46	US$482,034,000	1.375% UST due 01/31/2025	FIT3	5.329 %	T+0	US$50	$986.46

___________________
(1)	The Total Consideration payable per each US$1,000 principal amount of 2025 Notes that were validly tendered was calculated in accordance with the formula set forth in Schedule A to the Offer to Purchase, based on the Fixed Spread for the 2025 Notes, plus the Reference Yield based on the bid-side price of the Reference Treasury Security as quoted on the Reference Page as of 10:00 a.m. (New York City time) on June 17, 2024. The Total Consideration is inclusive of the Early Tender Payment.
(2)	Per US$1,000 principal amount of 2025 Notes.
(3)	The Early Tender Payment will be payable to holders who validly tendered 2025 Notes on or prior to the Early Tender Date whose notes are accepted for purchase.
(4)	Excludes accrued interest, which will be paid in addition to the Tender Offer Consideration or the Total Consideration, as applicable.

2027 Offer

Description of Notes	CUSIP/ ISIN Nos.	Outstanding Principal  Amount	Maximum Tender Amount	Tender Offer Consideration(1)(2)	Early Tender Payment(1)(3)	Total Consideration(1)(2)(4)
6.909% Subordinated Notes due 2027	05968L AK8 / US05968LAK89	U.S.$750,000,000	U.S.$400,000,000	U.S.$950	U.S.$50	U.S.$1,000

__________________
(1)	Per U.S.$1,000 principal amount of 2027 Notes.
(2)	Excludes accrued interest, which will be paid in addition to the Tender Offer Consideration or the Total Consideration, as applicable.
(3)	The Early Tender Payment will be payable to holders who validly tendered 2027 Notes on or prior to the Early Tender Date whose notes were accepted for purchase.
(4)	The Total Consideration is inclusive of the Early Tender Payment.

The Offers will expire at 5:00 P.M., New York City time, on July 2, 2024, unless the Offers are extended or earlier terminated by the Bank in its sole discretion (this date and time, including as extended or earlier terminated, as applicable, the "Expiration Date"). The early tender deadline for the Offers occurred at 5:00 p.m., New York City time, on June 14, 2024 (the "Early Tender Date"). The withdrawal deadline for the Offers was 5:00 P.M., New York City time, on June 14, 2024, and so has passed. Accordingly, Notes tendered (in the past or future) in the Offers before or on the Early Tender Date may no longer be withdrawn, except as required by applicable law.

BofA Securities, Inc., Citigroup Global Markets Inc. and J.P. Morgan Securities LLC are the dealer managers for the Offers (the "Dealer Managers"). Global Bondholder Services Corporation has been appointed as the information and tender agent for the Offers. 

Persons with questions regarding the Offers should contact BofA Securities, Inc. at (888) 292-0070 (toll-free) or (980) 387-3907 (collect), Citigroup Global Markets Inc. at (800) 558-3745 (toll-free) or (212) 723-6106 (collect), or J.P. Morgan Securities LLC at (866) 846-2874 (toll-free) or (212) 834-7279 (collect). In addition, holders of Notes may contact their broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Offers.

Holders who would like copies of the Offer to Purchase may call the information and tender agent, Global Bondholder Services Corporation at (212) 430-3774 or (855) 654-2015 (toll free) or by e-mail at contact@gbsc-usa.com.

This press release is for informational purposes only and is not a recommendation, an offer to purchase, or a solicitation of an offer to sell with respect to any securities. The Offers are being made solely pursuant to the Offer to Purchase that is being distributed to the holders of Notes. The Offers are not being made to, nor will tenders be accepted from or on behalf of, holders of Notes in any jurisdiction in which the making of the Offers or the acceptance thereof would not comply with the laws of that jurisdiction. Further, this press release is not an offer to sell or the solicitation of an offer to buy any securities.

Forward-Looking Statements

This release and the Offer to Purchase contains statements which may constitute "forward-looking statements". These forward-looking statements are not based on historical facts, but instead represent only our belief regarding future events, many of which, by their nature, are inherently uncertain and outside our control.  Words such as "anticipate," "believe," "estimate," "approximate," "expect," "may," "intend," "plan," "predict," "target," "forecast," "guideline," "should," "project" and similar words and expressions are intended to identify forward-looking statements. It is possible that our actual results may differ, possibly materially, from the anticipated results indicated in these forward-looking statements. Forward-looking statements speak only as of the date they were made, and we undertake no obligation to update publicly or revise any forward-looking statements after the date on which they are made in light of new information, future events and other factors.

About the Bank

Bancolombia S.A. is a full-service financial institution that offers a wide range of banking products and services to a diversified individual and corporate customer base of over 31 million customers.

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SOURCE Bancolombia S.A.

FAQ

What is Bancolombia's plan for the 3.000% Senior Notes due 2025?

Bancolombia plans to purchase all tendered 3.000% Senior Notes due 2025 for US$986.46 per US$1,000 principal amount.

When is the expected early settlement date for the Bancolombia tender offers?

The early settlement date is expected to be June 24, 2024.

What is the value offered for the 6.909% Subordinated Notes due 2027?

Holders of the 6.909% Subordinated Notes due 2027 will receive US$1,000 per US$1,000 principal amount.

When do the Bancolombia tender offers expire?

The offers expire on July 2, 2024.

What is the total principal amount of Bancolombia's 2025 and 2027 Notes being purchased?

The total principal amounts are US$267,421,000 for 2025 Notes and US$283,632,000 for 2027 Notes.