(Norfolk Southern issued the following news release on April 15.)
NORFOLK, Va. — Norfolk Southern Corporation announced that it plans to commence offers to exchange new unsecured Norfolk Southern debt securities and cash for a portion of its 7.80% notes due May 15, 2027, its 7.25% notes due February 15, 2031, and for any or all of its 9.00% notes due March 1, 2021. The purpose of the exchange offers is to improve Norfolk Southern’s debt maturity profile.
The exchange offers will expire at 12:00 midnight, New York City time, on May 12, 2005, unless extended.
Under the terms of one exchange offer, Norfolk Southern will exchange up to $350 million aggregate principal amount of its outstanding 7.80% notes for an equal aggregate principal amount of new notes maturing on May 17, 2029, and cash. The new notes due 2029 will bear interest at a rate per annum equal to the sum of (a) the bid-side yield on the 5.375% U.S. Treasury Note due February 15, 2031, as of 2 p.m., New York City time, on the second business day prior to the expiration date, and (b) 105 basis points.
In concurrent exchange offers, Norfolk Southern will exchange up to $200 million aggregate principal amount of its outstanding 7.25% notes and any or all of its outstanding 9.00% notes for an equal aggregate principal amount of new notes maturing on May 17, 2025, and cash. The new notes due 2025 will bear interest at a rate per annum equal to (a) the sum of the bid-side yield on the 5.375% U.S. Treasury Note due February 15, 2031, as of 2 p.m., New York City time, on the second business day prior to the expiration date, and (b) 100 basis points.
The total exchange price for the old notes is equal to the price per $1,000 principal amount of the old notes intended to result in a yield to maturity on the settlement date equal to the sum of (a) the bid-side yield on the reference U.S. Treasury Note, calculated on the second business day prior to the expiration date and (b) 85 basis points for the 7.80% notes, 87.5 basis points for the 7.25% notes or 75 basis points for the 9.00% notes. The total exchange price includes an early participation payment of $20 in cash per $1,000 principal amount of the old notes tendered, which will be paid only to holders who validly tender their old notes on or prior to 5 p.m., New York City time, on April 28, 2005. Holders validly tendering their old notes after 5 p.m., New York City time, on such date but on or before 12:00 midnight, New York City time, on the expiration date will receive the total exchange price less the early participation payment. As described in more detail in the prospectuses dated April 15, 2005, only holders whose tenders are accepted by Norfolk Southern will receive the total exchange price, or the total exchange price less the early participation payment, in exchange for their old notes.
Deutsche Bank Securities is the coordinator for the exchange offers. Deutsche Bank Securities and Merrill Lynch & Co. are the joint-lead dealer managers and Citigroup and Barclays Capital are the co-dealer managers for the exchange offers.
Norfolk Southern, through its Norfolk Southern Railway Company subsidiary, operates approximately 21,300 route miles in 22 states, the District of Columbia and Ontario, Canada, serving every major container port in the eastern United States and providing connections to western rail carriers. Norfolk Southern operates an extensive intermodal network and is the nation’s largest rail carrier of automotive parts and finished vehicles.