Marriott Corp. yesterday said it received tenders from enough of its debt holders to satisfy its minimum threshold for proceeding with its exchange offer.
But the Washington, D.C.-based company was still awaiting a ruling from the Internal Revenue Service and other approvals necessary for completing its split into two companies through a special dividend transaction.
The announcement of the split last October angered bondholders, because the move will leave one company with virtually all of Marriott's debt.
Robert T. Souers, a Marriott spokesman, said he could not comment on whether the company would receive the necessary approvals in time to make the Sept. 1 record date and Sept. 10 distribution date that Marriott's board of directors has established for the special dividend.
"We haven't heard from them so far," Souers said of the IRS. If those conditions remain unsatisfied as of today, Marriott may decide to set new record and completion dates. The board is scheduled to meet today, he said.
In a press release issued yesterday, Marriott said that as of Friday the company had received tenders for about $1.2 billion, or 88%, of the aggregate amount of eight series of bonds excluding its Series F notes and Series I notes.
It also got more than 51% of the aggregate principal amount for each series, again excluding the Series F and I notes.
The company originally wanted 85% aggregate of all series including the Series I and F securities, and 51 % of each series, but decided to change that last Monday as it became apparent that necessary levels were unlikely to be achieved in those two series, Souers said. Because Marriott received such "excellent participation in all the other series," it decided the best course was to modify its test and allow the offer to proceed.
Also yesterday, Marriott said it has extended the exchange offer until 5 p.m. Eastern Daylight Time on Sept. 9.
If Marriott does not receive tenders representing more than 50% of its Series F notes as of that date, the company plans to call for redemption at par, plus accrued interest, all the Series F notes that have not been tendered.
If more than 50% of the Series I notes are not tendered by the deadline, the company may decide to amend the two indentures relating to the Series I notes and the new notes that would be issued by Host Hospitality Inc., an indirect, wholly owned Marriott subsidiary. The changes would secure the Series I notes equally and ratably with the new notes to be issued in the exchange offer.
Marriott received tenders in roughly the following amounts for each series of senior notes and debentures involved in the offer: * 9 5/8% Series B due 1996: $90 million or 90%. * 8 1/8% Series C due 1996: $142 million or 71%. * 8 7/8% Series D due 1997: $82 million or 82%. * 9 7/8% Series E due 1997: $132 million or 88%. * 9 1/8% Series F due 1995: $46 million or 46%. * 9% Series I due 1995: $12 million or 12%. * 10 1/4% Series K due 2001: $114 million or 91% * 10% Series L due 2012: $188 million or 94%. * 9 1/2% Series M due 2002: $185 million or 92%. * 9 3/8% debentures due 2007: $237 million or 95%.
In related news, Marriott yesterday said it executed an agreement with a group of 20 major banks for a $1 billion, five-year revolving line of credit for Marriott International Inc. to use. Marriott International will begin operation following the special dividend transaction.
Elsewhere, Anheuser-Busch Cos. yesterday called all $100 million of its outstanding notes due Oct. 1, 1996.
The notes will become due and payable on Oct. 1 at a price of 100% of the principal amount. After that date, interest will cease to accrue.
An official at the St. Louis-based brewer said the company decided to call the notes because it makes economic sense and because Oct. 1 marks the first time the company is allowed to call them. Anheuser-Busch has no plans for another new issue, he said.
Whitman Corp. filed a shelf registration with the Securities and Exchange Commission to offer up to $300 million of debt, according to William Moore, vice president and general counsel at the company. No underwriters have been named yet, he said.
Moore knew of no immediate plans for an issue.
"Of course, its a very favorable market," he said. Proceeds would be used for general corporate purposes including debt repayment, he said.
In secondary trading, high-yield issues lost 1/2 point as the market looked ahead to the Labor Day weekend. Accounts were also making room for the cheaper new-issue market and were selling off secondary issues, which were trading very expensively. Mutual fund cash has also slowed, one trader said.
In the high-grade market, "it was actually a pretty dull day," one trader said. In the long end, spreads on bullet issues were firm to tighter, while callable bonds widened out slightly.
New issues
Associates Corp. issued $300 million of 5.25% notes due 1998 at par. The noncallable notes were priced to yield 47 basis points more than comparable Treasuries. Moody's rates the offering Al, while Standard & Poor's Corp. rates it AA-minus. Fitch Investors Service rates the offering AA. First Boston Corp. was lead manager.
The Tennessee Valley Authority issued $150 million of 4.19% medium-term notes due 1996 at par. Noncallable for a year, the notes were priced to yield five basis points more than comparable Treasuries. Merrill Lynch & Co. was sole manager of the offering.
