ADM Announces Successful Remarketing of $1.75 Billion in Debt Underlying Equity Units
DECATUR, Ill.--(BUSINESS WIRE)--Archer Daniels Midland Company (NYSE: ADM) today announced the successful remarketing of $1.75 billion in indebtedness originally issued as a component of its equity units in June 2008. The remarketing involved 10- and 30-year tranches. As a result of the remarketing, the coupon rate on this indebtedness was reset to 4.479 percent for the $750-million, 10-year tranche and 5.765 percent for the $1.0-billion, 30-year tranche.
The remarketing is scheduled to close on April 4, 2011, subject to customary closing conditions. The remarketing is being conducted on behalf of equity unit holders and ADM will not initially receive any of the proceeds. Proceeds from the remarketing will be used to purchase U.S. Treasury securities that will be pledged to secure the stock purchase obligations of the holders of the equity units. The U.S. Treasury securities will be held by the collateral agent, The Bank of New York Mellon. On June 1, 2011, ADM will receive approximately $1.75 billion from the collateral agent and will issue common stock under the forward stock purchase contracts, which will complete the company’s equity obligations under the original equity units.
The proceeds from the share issuance will be used for general corporate purposes, including paying down some short-term debt.
As a result of the remarketing described above, for the calculation of ADM’s diluted earnings per share (EPS) for the third quarter of fiscal 2011, ADM will be required to use the “if converted” method for these securities. The “if converted” method requires ADM to assume conversion of these securities into shares at the beginning of the third quarter. In applying the “if converted” method, the after-tax interest expense is added to the numerator of the diluted EPS calculation while approximately 44 million additional shares are added to the denominator of the diluted EPS calculation. Once the remarketing closes, ADM is no longer required to use the “if converted” method for calculating diluted EPS.
For the fourth quarter of fiscal 2011, the impact of the “if converted” method is expected to be insignificant because it will only be applied for four days assuming the remarketing closes, as expected, on April 4, 2011. However, the issuance of common stock on June 1, 2011, as described above, will result in approximately 44 million additional shares of ADM’s common stock being issued and outstanding from the date of issuance.
In summary, these transactions are expected to result in 44 million additional shares of common stock being issued and outstanding for the month of June (i.e. one month), which will affect both basic and diluted EPS for the fourth quarter and year ended June 30, 2011. Additionally, for diluted EPS, the “if converted” method, as described above, is required to be used for approximately three months, both for the third quarter of fiscal 2011 and for the fiscal year ended June 30, 2011.
BofA Merrill Lynch, Citi and J.P. Morgan Securities Inc. are the joint lead remarketing agents.
This announcement does not constitute an offer to sell or a solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. The offering of these securities may be made only by means of a prospectus and a related prospectus supplement, copies of which may be obtained when available from Citigroup Global Markets Inc. toll-free at 1-877-858-5407 or e-mail firstname.lastname@example.org; J.P. Morgan Securities LLC (collect) at 212-834-4533; or Merrill Lynch, Pierce, Fenner & Smith Incorporated toll-free at 1-800-294-1322 or e-mail email@example.com.
Every day, the 29,000 people of Archer Daniels Midland Company (NYSE: ADM) turn crops into renewable products that meet the demands of a growing world. At more than 240 processing plants, we convert corn, oilseeds, wheat and cocoa into products for food, animal feed, chemical and energy uses. We operate the world’s premier crop origination and transportation network, connecting crops and markets in more than 60 countries. Our global headquarters is in Decatur, Illinois, and our net sales for the fiscal year ended June 30, 2010, were $62 billion.
This press release includes forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that are subject to risks, uncertainties and other factors, including the current market demand for these types of securities and the securities of ADM and the negotiations between ADM and the remarketing agents. These risks, uncertainties and other factors could cause actual results to differ materially from those referred to in the forward-looking statements. The reader is cautioned not to rely on these forward-looking statements. Other risks that could impact the offering are described in detail in the ADM Annual Report on Form 10-K for the fiscal year ended June 30, 2010 as filed with the U.S. Securities and Exchange Commission. All forward-looking statements are based on information currently available to ADM and ADM assumes no obligation to update any such forward-looking statements.
Archer Daniels Midland Company
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