Vector Announces Pricing of $230 Million of 10.500% Senior Notes Due 2026
Vector Group Ltd. (NYSE: VGR) (“Vector” or the “Company”) announced today that it has priced, and entered into an agreement to issue and sell, an additional $230 million aggregate principal amount of 10.500% senior notes due 2026 (the “Notes”). The offering is expected to close on November 18, 2019, subject to the satisfaction of customary closing conditions.
The Notes will be issued by the Company at an initial price of 98.501% of the principal amount of the Notes plus accrued interest from November 1, 2019 to, but excluding, November 18, 2019. The Notes will bear interest at a rate of 10.500% per year, payable semi-annually in arrears on May 1 and November 1 of each year, commencing on May 1, 2020. The Notes will mature on November 1, 2026, unless earlier repurchased or redeemed in accordance with their terms.
The Notes will have the same terms as the Company’s existing 10.500% notes, other than the date of issue and the initial price. The Notes will accrue interest from November 1, 2019. Immediately after giving effect to the issuance of the Notes, the Company will have $555,000,000 aggregate principal amount of 10.500% Senior Notes due 2026 outstanding.
The Notes will be fully and unconditionally guaranteed on a joint and several basis by all of the wholly owned domestic subsidiaries of the Company that are engaged in the conduct of the Company’s cigarette businesses, and by DER Holdings LLC, its wholly owned subsidiary through which the Company indirectly owns a 100% interest in Douglas Elliman Realty, LLC, which operates the largest residential brokerage company in the New York metropolitan area and also conducts residential real estate brokerage operations in Florida, California, Connecticut, Massachusetts and Colorado. The Notes will not be guaranteed by New Valley LLC, or any subsidiaries of New Valley LLC, other than DER Holdings LLC. The Notes will not be secured by any of the assets of the Company or the guarantors.
The Company intends to use the net cash proceeds from the offering to: (i) redeem, repurchase, repay or otherwise retire the Company’s outstanding 5.5% Variable Interest Senior Convertible Notes due 2020 (the “2020 Convertible Notes”), including accrued interest thereon, at, or prior to, their maturity, (ii) pay costs and expenses in connection with the offering of the Notes and the transactions contemplated thereby, and (iii) for general corporate purposes. Pending the application of the net proceeds of this offering, the Company intends to invest such net proceeds temporarily in investment grade securities, money market funds, bank deposit accounts or similar short-term investments.