WHITE PLAINS, N.Y., September 20, 2011 – ITT Corporation (NYSE: ITT) announced today that it has commenced a cash tender offer (the “Offer”) for up to $100 million aggregate principal amount of its 7.40% Debentures due 2025 (the “Debentures”).
The Offer is being conducted in connection with ITT’s plan to spin off its subsidiaries, Exelis Inc. and Xylem Inc., by distributing shares of such subsidiaries to shareholders of ITT (the “Spin-off”). The purpose of the Offer is to acquire Debentures as part of ITT’s decision to repurchase, redeem and/or defease all of its long-term debt in connection with the Spin-offs. ITT expects to defease all of its obligations with respect to Debentures that remain outstanding following completion of the Offer in accordance with the satisfaction and discharge provisions of the indenture governing the Debentures.
Details regarding the Offer:
ITT is offering to purchase for cash up to $100 million aggregate principal amount of its 7.40% Debentures due 2025. The price paid in the Offer will be determined based on the yield to maturity of the U.S. Treasury reference security specified in the table below (the “UST Reference Security”) plus a spread determined using a modified “Dutch Auction” method, all as more fully described in the Offer to Purchase dated September 20, 2011 (the “Offer to Purchase”) and related Letter of Transmittal. Debentures validly tendered and not withdrawn on or before 5:00 p.m., New York City time, on October 3, 2011 (the “Early Participation Date”) will be eligible to receive total consideration (the “Total Consideration”), which includes an early participation amount equal to $50 per $1,000 principal amount of Debentures (the “Early Participation Amount”). Debentures tendered after the Early Participation Date but on or prior to the expiration date, which is 12:00 midnight, New York City time, on October 18, 2011 (the “Expiration Date”), will be eligible to receive only the tender offer consideration (“Tender Offer Consideration”), namely the Total Consideration less the Early Participation Amount. Tendered Debentures may be withdrawn at any time prior to 5:00 p.m., New York City time, on October 3, 2011 (the “Withdrawal Date”) but not thereafter. Debentures tendered after the Withdrawal Date may not be withdrawn. Acceptance of tendered debentures may be subject to proration as described in the Offer to Purchase.
The Total Consideration payable for the Debentures will be a price per $1,000 principal amount equal to an amount, calculated as described in the Offer to Purchase, that would reflect, as of the date of purchase, a yield to the maturity date of the Debentures equal to the sum of (i) the yield to maturity (the “Reference Yield”) of the UST Reference Security and (ii) the “clearing spread” as determined pursuant to a modified “Dutch Auction” described in the Offer to Purchase, without regarding accrued and unpaid interest thereon from the last interest payment date to, but not including, the payment date for Debentures purchased pursuant to the Offer. Each holder tendering Debentures in the Offer must specify the maximum spread (the “Bid Spread”) in excess of the Reference Yield that such holder would be willing to accept as the basis for determining the Total Consideration payable in exchange for each $1,000 principal amount of Debentures the holder chooses to tender in the Offer that is not less than the minimum spread of 10 basis points or greater than the maximum spread of 50 basis points as set forth in the table below, provided that holders who validly tender Debentures without specifying a Bid Spread will be deemed to have specified the maximum spread (lowest Debenture price) as set forth in the table below as their Bid Spread.
| Acceptable Bid Spread Range (in basis points) | |||||||
|---|---|---|---|---|---|---|---|
| Title of Security | CUSIP Number | Principal Amount Outstanding (MM) | Early Participation Amount(1) | Minimum Spread | Maximum/Spread | UST Reference Security | Bloomberg Ref. Page |
| 7.40% Debentures due 2025 | 450679AT2 | $250.0 | $50 | 10 | 50 | 6.875% U.S. Treasury due August 15, 2025 | PX7 |
| (1) Per $1,000 principal amount of Debentures accepted for purchase. | |||||||
The Total Consideration and the Tender Offer Consideration will be payable in cash. Acceptance of tendered Debentures may be subject to proration as described in the Offer to Purchase. In addition, holders who validly tender Debentures that are accepted for purchase by us will receive a cash payment representing the accrued and unpaid interest on those Debentures from the last interest payment date to, but not including, the payment date for Debentures purchased in the Offer.
The Offer is conditioned upon certain conditions described in the Offer to Purchase. ITT expressly reserves the right, in its sole discretion, subject to applicable law, to terminate the Offer at any time prior to the Expiration Date. The Offer is not conditioned on any minimum principal amount of Debentures being tendered.
ITT has retained J.P. Morgan Securities LLC and RBS Securities Inc. to act as Dealer Managers for the Offer. The Bank of New York Mellon has been retained to act as the depositary for the Offer and D.F. King & Co., Inc. has been retained to act as the information agent for the Offer. For additional information regarding the terms of the Offer, please contact: J.P. Morgan Securities LLC at (866) 834-4666 (toll-free) or (212) 834-4811 (collect) or RBS Securities Inc. at (877) 297-9832 (toll-free) or (203) 897-6145 (collect). Requests for documents and questions regarding the tendering of Debentures may be directed to D.F. King & Co., Inc. at (212) 269-5550 (for banks and brokers only) or (800) 967-5079 (for all others toll-free).
This press release does not constitute an offer to sell or purchase, or a solicitation of an offer to sell or purchase, or the solicitation of tenders or consents with respect to, the Debentures. No offer, solicitation, purchase or sale will be made in any jurisdiction in which such an offer, solicitation, or sale would be unlawful. The Offer is being made solely pursuant to the Offer to Purchase and the related Letter of Transmittal made available to holders of the Debentures. None of ITT, the Dealer Managers, the Depositary, the Information Agent or their respective affiliates is making any recommendation as to whether or not holders should tender all or any portion of their Debentures in the Offer. Holders are urged to evaluate carefully all information in the Offer to Purchase and the related Letter of Transmittal, consult their own investment and tax advisors and make their own decisions whether to tender Debentures, and, if so, the principal amount of Debentures and the Bid Spread at which to tender.