Vector Group's $200 Million Senior Secured Notes Issue Commences

Vector Group Ltd. VGR revealed it commenced an offer to issue, as well as sell an additional $200 million principal amount of 7.750 percent senior secured notes due 2021. According to the company, the offering would be priced on May 3 and the issue was expected to close on May 9, subject to the customary closing conditions.

Vector Group said that the Notes would have the same terms except issue date and purchase price. The company added that the senior notes would be treated as the same series as the $450 million aggregate principal amount of 7.750 percent senior secured notes due 2021 issued by it on February 12, 2013 and the additional $150 million aggregate principal amount of 7.750 percent senior secured notes due 2021 issued by it two years ago.

The company indicated the notes would carry an interest of 7.750 percent per year, payable semi-annually in arrears on February 15 and August 15 of each year. The company would start the process from August 15 this year. The Notes would mature on February 15, 2021, unless earlier repurchased or redeemed in accordance with their terms.

Vector Group said the Notes would be fully and unconditionally guaranteed by all of the wholly-owned domestic subsidiaries of it, which were engaged in the conduct of its cigarette businesses. The guarantees provided by some of the subsidiary guarantors would be secured by first priority or second priority security interests in some assets of such guarantors.

The company said it plans to use the net cash proceeds from the offering for general corporate purposes. That included additional investments in real estate through its wholly owned subsidiary, New Valley LLC, and in its existing tobacco business.

Shares of the company traded 2.4 percent higher on Friday.