PRICING AGREEMENT
Exhibit
1.2
Banc of
America Securities LLC
Citigroup
Global Markets Inc.
X.X.
Xxxxxx Securities Inc.
As
Representatives of the several
Underwriters
named in Schedule I hereto
September
9, 2008
Ladies and
Gentlemen:
Aetna
Inc., a Pennsylvania corporation (the “Company”), proposes, subject
to the terms and conditions stated herein and in the Underwriting Agreement
dated as of June 6, 2006 (the “Underwriting Agreement”), to
issue and sell to the Underwriters named in Schedule I hereto (the “Underwriters”) the debt
securities specified in Schedule II hereto (the “Designated Securities”). Each
of the provisions of the Underwriting Agreement is incorporated herein by
reference in its entirety, and shall be deemed to be a part of this Agreement to
the same extent as if such provisions had been set forth in full herein; and
each of the representations and warranties set forth therein shall be deemed to
have been made at and as of the date of this Pricing Agreement. Each reference
to the Representatives herein and in the provisions of the Underwriting
Agreement so incorporated by reference shall be deemed to refer to you. Unless
otherwise defined herein, terms defined in the Underwriting Agreement are used
herein as therein defined. The Representatives designated to act on behalf of
each of the Underwriters of the Designated Securities pursuant to Section 15 of
the Underwriting Agreement and the address of the Representatives referred to in
such Section 15 are set forth at the end of Schedule II hereto.
Subject to
the terms and conditions set forth herein and in the Underwriting Agreement
incorporated herein by reference, the Company agrees to issue and to sell to
each of the Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Company, at the time and place and at the purchase
price to the Underwriters set forth in Schedule II hereto, the principal amount
of Designated Securities set forth opposite the name of such Underwriter in
Schedule I hereto.
If the
foregoing is in accordance with your understanding, please sign and return to us
counterparts hereof, and upon acceptance hereof by you, on behalf of each of the
Underwriters, this letter and such acceptance hereof, including the provisions
of the Underwriting Agreement incorporated herein by reference, shall constitute
a binding agreement between each of the Underwriters and the Company. It is
understood that your acceptance of this letter on behalf of each of
the
Underwriters is or will be pursuant to the authority set forth in a form of
Agreement Among Underwriters, the form of which shall be submitted to the
Company for examination upon request.
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Very
truly yours,
AETNA
INC.
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By:
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/s/ Xxxxxx X. Xxxxx, Xx.
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| Name Xxxxxx X. Xxxxx, Xx. | |||
| Title Vice President, Finance and Treasurer | |||
2
Accepted as of the date
hereof:
Banc of
America Securities LLC
Citigroup
Global Markets Inc.
X.X.
Xxxxxx Securities Inc.
On behalf
of each of the
Underwriters
| By: | Banc of America Securities LLC | |||
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By:
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/s/
Xxxxxx X. Xxxxxxx
|
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||
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Name:
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Xxxxxx X. Xxxxxxx |
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Title:
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Vice President |
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| By: | Citigroup Global Markets Inc. | |||
| By: | /s/ Xxxxxxx X. Xxxxxxx | |||
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Name:
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Xxxxxxx X. Xxxxxxx | |||
| Title: | Vice President | |||
| By: | X.X. Xxxxxx Securities Inc. | |||
| By: | /s/ Xxxxxx Xxxxxxxxx | |||
|
Name:
|
Xxxxxx Xxxxxxxxx | |||
| Title: | Vice President | |||
3
SCHEDULE
I
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Underwriter
|
Principal
Amount
of 6.50% Senior Notes due 2018 to be Purchased
|
|
Banc
of America Securities
LLC
|
$100,000,000
|
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Citigroup Global Markets
Inc.
|
100,000,000
|
|
X.X. Xxxxxx Securities
Inc.
|
100,000,000
|
|
Barclays Capital
Inc.
|
23,750,000
|
|
Credit Suisse Securities
(USA)
LLC
|
23,750,000
|
|
Xxxxxxx, Xxxxx &
Co.
|
23,750,000
|
|
Xxxxxx Xxxxxxx & Co.
Incorporated
|
23,750,000
|
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Greenwich
Capital Markets,
Inc.
|
23,750,000
|
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UBS
Securities
LLC
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23,750,000
|
|
Wachovia
Capital Markets,
LLC
|
23,750,000
|
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BNY
Capital Markets,
Inc.
|
3,750,000
|
|
Fifth
Third Securities,
Inc.
|
3,750,000
|
|
Lazard
Capital Markets
LLC
|
3,750,000
|
|
Xxxxxx
Brothers
Inc.
|
3,750,000
|
|
NatCity
Investments,
Inc.
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3,750,000
|
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Xxxxx Xxxxxxx &
Co.
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3,750,000
|
|
PNC
Capital Markets
LLC
|
3,750,000
|
|
SunTrust
Xxxxxxxx Xxxxxxxx,
Inc.
|
3,750,000
|
|
Xxxxx Fargo Securities,
LLC
|
3,750,000
|
|
Total
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$500,000,000
|
SCHEDULE
II
TITLE OF
DESIGNATED SECURITIES:
6.50%
Senior Notes due September 15, 2018 (hereinafter referred to as the “Notes”)
AGGREGATE
PRINCIPAL AMOUNT:
$500,000,000
PRICE TO
PUBLIC:
99.716% of
the principal amount of the Notes, plus accrued interest, if any, from September
12, 2008.
PURCHASE
PRICE BY UNDERWRITERS:
99.066% of
the principal amount of the Notes, plus accrued interest, if any, from September
12, 2008.
SPECIFIED
FUNDS FOR PAYMENT OF PURCHASE PRICE:
Immediately
Available Funds
INDENTURE:
Senior
Indenture dated as of March 2, 2001, between the Company, and U.S. Bank National
Association, successor in interest to State Street Bank and Trust Company, as
Trustee.
MATURITY:
September
15, 2018
INTEREST
RATE:
6.50% per
annum
INTEREST
PAYMENT DATES:
March 15
and September 15, beginning March 15, 2009.
REDEMPTION
PROVISIONS:
Optional
Redemption
The Notes will be redeemable at any
time, in whole or in part, at a redemption price equal to the greater
of:
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•
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100%
of the principal amount of the Notes being redeemed, or
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•
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the
sum of the present values of the remaining scheduled payments of principal
and interest on the Notes being redeemed from the redemption date to the
maturity date discounted to the redemption date on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at the
Treasury Rate (as defined below) plus 45 basis
points,
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plus, in
each case, any interest accrued but not paid to the date of
redemption.
“Treasury Rate” means, with
respect to any redemption date for any portion of the Notes,
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|
•
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the
yield, under the heading which represents the average for the immediately
preceding week, appearing in the most recently published statistical
release designated “H.15(519)” or any successor publication which is
published weekly by the Board of Governors of the Federal Reserve System
and which establishes yields on actively traded United States Treasury
securities adjusted to constant maturity under the caption “Treasury
Constant Maturities,” for the maturity corresponding to the Comparable
Treasury Issue (if no maturity is within three months before or after the
maturity date for the Notes, yields for the two published maturities most
closely corresponding to the Comparable Treasury Issue will be determined
and the Treasury Rate shall be interpolated or extrapolated from those
yields on a straight line basis, rounding to the nearest month),
or
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•
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if
the release referred to in the previous bullet (or any successor release)
is not published during the week preceding the calculation date or does
not contain the yields referred to above, the rate per annum equal to the
semi-annual equivalent yield to maturity of the Comparable Treasury Issue,
calculated using a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price
for that redemption date.
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6
The
Treasury Rate will be calculated on the third Business Day preceding the
redemption date.
“Comparable Treasury Issue”
means the United States Treasury security selected by an “Independent Investment
Banker” as having a maturity comparable to the remaining term of the Notes to be
redeemed that would be utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt securities
of comparable maturity to the remaining term of the Notes to be
redeemed.
“Comparable Treasury Price”
means, with respect to any redemption date for any Notes, the average of all
Reference Treasury Dealer Quotations (as defined below) obtained.
“Independent Investment Banker”
means one of the Reference Treasury Dealers appointed by the Trustee after
consultation with the Company.
“Reference Treasury Dealer”
means each of Banc of America Securities LLC, Citigroup Global Markets Inc. and
X.X. Xxxxxx Securities Inc. If any Reference Treasury Dealer ceases
to be a primary U.S. government securities dealer in New York City (a “Primary Treasury Dealer”), the Company
will substitute another Primary Treasury Dealer for that dealer.
“Reference Treasury Dealer
Quotations” means, with respect to each Reference Treasury Dealer and any
redemption date, the average, as determined by the Trustee, of the bid and asked
prices for the Comparable Treasury Issue (expressed in each case as a percentage
of its principal amount) quoted in writing to the Trustee by that Reference
Treasury Dealer at 5:00 p.m. on the third Business Day preceding the redemption
date.
Notice of any redemption will be mailed
at least 30 days but no more than 60 days before the redemption date to each
holder of Notes to be redeemed.
Unless the Company defaults in payment
of the redemption price, interest will cease to accrue on the Notes or portions
of the Notes called for redemption on and after the redemption
date.
Repurchase
Upon a Change of Control
If a Change of Control Triggering Event
occurs, unless the Company has exercised its right to redeem the Notes in full,
as described under “Optional Redemption” above, the Company will make an offer
to each holder (the “Change of
Control Offer”) to repurchase any and all (equal to $2,000 or an integral
multiple of $1,000) of such holder’s Notes at a repurchase price in cash equal
to 101% of the aggregate principal amount of the Notes repurchased plus accrued
and unpaid interest, if any, thereon, to the date of repurchase (the “Change of Control
Payment”).Within 30 days following any Change of Control Triggering
Event, the Company will mail a notice to holders of Notes describing the
transaction or transactions that constitute the Change of Control Triggering
Event and offering to repurchase the Notes on the date specified in the notice
(the “Change of Control Payment
Date”), which date will be no less than 30 days and no more than 60 days
from the date such notice is mailed, pursuant to the procedures required by the
Notes and described in such notice.
The Company will comply with the
requirements of Rule 14e-1 under the Exchange Act, and any other securities laws
and regulations thereunder to the extent those laws and regulations are
applicable in connection with the repurchase of the Notes as a result of a
Change of Control Triggering Event. To the extent that the provisions of any
securities laws or regulations conflict with the Change of Control repurchase
provisions of the Notes, the Company will comply with the applicable securities
laws and regulations and will not be deemed to have breached its obligations
under the Change of Control repurchase provisions of the Notes by virtue of such
conflicts.
The Company will not be required to
offer to repurchase the Notes upon the occurrence of a Change of Control
Triggering Event if a third party makes such an offer in the manner, at the
times and otherwise in compliance with the requirements for an offer made by the
Company and the third party repurchases on the applicable date all Notes
properly tendered and not withdrawn under its offer; provided
that for all purposes of the Notes and the Senior Indenture, a failure by
such third party to comply with the requirements of such offer and to complete
such offer shall be treated as a failure by the Company to comply with its
obligations to offer to purchase the Notes unless the Company promptly makes an
offer to repurchase the Notes at 101% of the outstanding principal amount
thereof plus accrued and unpaid interest, if any, thereon, to the date of
repurchase, which shall be no later than 30 days after the third party’s
scheduled Change of Control Payment Date.
On the Change of Control Payment Date,
the Company will, to the extent lawful:
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·
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accept
or cause a third party to accept for payment all Notes or portions of
Notes properly tendered pursuant to the Change of Control
Offer;
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·
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deposit
or cause a third party to deposit with the paying agent an amount equal to
the Change of Control Payment in respect of all Notes or portions of Notes
properly tendered; and
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7
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·
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deliver
or cause to be delivered to the Trustee the Notes properly accepted,
together with an officer’s certificate stating the principal amount of
Notes or portions of Notes being
purchased.
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“Below Investment Grade Rating
Event” means the Notes are rated below an Investment Grade Rating by each
of the Rating Agencies on any date from the earlier of (1) the occurrence of a
Change of Control and (2) public notice of the Company’s intention to effect a
Change of Control, in each case
until the end of the 60-day
period following the earlier of (1) the occurrence of a Change of Control and
(2) public notice of our intention to effect a Change of Control; provided, however, that if
(i) during such 60-day period one or more Rating Agencies has publicly announced
that it is considering the possible downgrade of the Notes, and (ii) a downgrade
by each of the Rating Agencies that has made such an announcement would result
in a Below Investment Grade Rating Event, then such 60-day period shall be
extended for such time as the rating of the Notes by any such Rating Agency
remains under publicly announced consideration for possible downgrade to a
rating below an Investment Grade Rating and a downgrade by such Rating Agency to
a rating below an Investment Grade Rating could cause a Below Investment Grade
Rating Event. Notwithstanding the foregoing, a rating event otherwise arising by
virtue of a particular reduction in rating will not be deemed to have occurred
in respect of a particular Change of Control (and thus will not be deemed a
Below Investment Grade Rating Event for purposes of the definition of Change of
Control Triggering Event) if the rating agencies making the reduction in rating
to which this definition would otherwise apply do not announce or publicly
confirm or inform the Trustee in writing at the Company’s or the Trustee’s
request that the reduction was the result, in whole or in part, of any event or
circumstance comprised of or arising as a result of, or in respect of, the
applicable Change of Control (whether or not the applicable Change of Control
has occurred at the time of the rating event).
“Change of Control” means the
occurrence of any of the following: (1) direct or indirect sale, transfer,
conveyance or other disposition (other than by way of merger or consolidation),
in one or a series of related transactions, of all or substantially all of the
properties or assets of the Company and its subsidiaries taken as a whole to any
“person” (as that term is used in Section 13(d)(3) of the Exchange Act) other
than to the Company or one of its subsidiaries; (2) the consummation of any
transaction (including, without limitation, any merger or consolidation) the
result of which is that any “person” (as that term is used in Section 13(d)(3)
of the Exchange Act) other than the Company or one of its subsidiaries becomes
the beneficial owner, directly or indirectly, of more than 50% of the then
outstanding number of shares of the Company’s voting stock; or (3) the first day
on which a majority of the members of the Company’s Board of Directors are not
Continuing Directors; provided, however, that a
transaction will
8
not be
deemed to involve a Change of Control if (A) the Company becomes a wholly owned
subsidiary of a holding company and (B)(x) the holders of the voting stock of
such holding company immediately following that transaction are substantially
the same as the holders of the Company’s voting stock immediately prior to that
transaction or (y) immediately following that transaction no “person” (as that
term is used in Section 13(d)(3) of the Exchange Act) is the beneficial owner,
directly or indirectly, of more than 50% of the voting stock of such holding
company. For purposes of this definition, “voting stock” means capital
stock of any class or kind the holders of which are ordinarily, in the absence
of contingencies, entitled to vote for the election of directors (or persons
performing similar functions) of the Company, even if the right to vote has been
suspended by the happening of such a contingency.
“Change of Control Triggering
Event” means the occurrence of both a Change of Control and a Below
Investment Grade Rating Event.
“Continuing Directors” means,
as of any date of determination, any member of the Board of Directors of the
Company who (1) was a member of the Board of Directors of the Company on the
date of the issuance of the Notes; or (2) was nominated for election or elected
to the Board of Directors of the Company with the approval of a majority of the
Continuing Directors who were members of such Board of Directors of the Company
at the time of such nomination or election (either by specific vote or by
approval of the Company’s proxy statement in which such member was named as a
nominee for election as a director).
“Fitch” means Fitch Ratings
Inc.
“Investment Grade Rating” means
a rating by Xxxxx’x equal to or higher than Baa3 (or the equivalent under any
successor rating category of Moody’s), a rating by S&P equal to or higher
than BBB- (or the equivalent under any successor rating category of S&P), a
rating by Fitch equal to or higher than BBB- (or the equivalent under any
successor rating category of Fitch), and the equivalent investment grade credit
rating from any replacement rating agency or rating agencies selected by the
Company under the circumstances permitting the Company to select a replacement
agency and in the manner for selecting a replacement agency, in each case as set
forth in the definition of “Rating Agencies”.
“Moody’s” means Xxxxx’x
Investors Service, Inc.
“Rating Agencies” means (1)
Xxxxx’x, S&P and Fitch; and (2) if any or all of Xxxxx’x, S&P or Fitch
ceases to rate the Notes or fails to make a rating of the Notes publicly
available for reasons outside of the Company’s control, a “nationally recognized
statistical rating organization” within the meaning of Rule
9
15c3-1(c)(2)(vi)(F)
under the Exchange Act, that the Company selects (pursuant to a resolution of
the Company’s Board of Directors) as a replacement agency for any of Xxxxx’x,
S&P or Fitch, or all of them, as the case may be.
“S&P” means Standard &
Poor’s Ratings Services, a division of The XxXxxx-Xxxx Companies,
Inc.
SINKING
FUND PROVISIONS:
No sinking
fund provisions
TIME OF
DELIVERY:
9:00 a.m. Eastern time on September 12,
2008
CLOSING
LOCATION:
Xxxxxxxx & Xxxxxxxx LLP, 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx00000
NAMES AND
ADDRESSES OF REPRESENTATIVES:
Banc of
America Securities LLC
Xxx Xxxxxx
Xxxx
Xxx Xxxx,
Xxx Xxxx 00000
Citigroup
Global Markets Inc.
000
Xxxxxxxxx Xxxxxx
Xxx Xxxx,
Xxx Xxxx 00000
X.X.
Xxxxxx Securities Inc.
000 Xxxx
Xxxxxx
Xxx Xxxx,
Xxx Xxxx 00000
10
SCHEDULE
III
Specify
Time of Sale and Time of Sale Information
Time
of Sale
2:00 p.m.
on September 9, 2008
Time
of Sale Information
Preliminary
Prospectus dated September 9, 2008
Free
Writing Prospectus dated September 9, 2008
SCHEDULE
IV
Term
Sheet for Designated Securities
$500,000,000 6.50% Senior Notes due
September 15,
2018
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Issuer:
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Aetna
Inc.
|
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A3/A-/A-
|
|
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Note Type:
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Senior
Notes
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Legal
Format:
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SEC
Registered
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Principal
Amount:
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$500,000,000
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Trade Date:
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September 9,
2008
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Settlement Date (T+3
days):
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September 12,
2008
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Maturity
Date:
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September 15, 2018
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Coupon:
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6.50%
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Interest Payment Frequency:
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Semi-annual
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Interest Payment
Dates:
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March 15 and September
15
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First Pay
Date:
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March 15,
2009
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Day Count:
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30/360
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Pricing
Benchmark:
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4.00% due August
2018
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Benchmark
Spot:
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103-13
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Benchmark
Yield:
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3.589%
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Reoffer Spread to
Benchmark:
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+295 bps
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Reoffer Yield:
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6.539%
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Price to Public / Reoffer
Price:
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99.716%
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Underwriting
Fees:
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0.65%
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Use of
Proceeds:
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Net proceeds will be used to repay
outstanding commercial paper borrowings.
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Optional
Redemption:
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At the greater of 100% of the
principal amount of the notes or at a make-whole using a
discount rate of Treasury plus 45 basis
points
|
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Minimum
Denomination:
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$2,000 x
$1,000
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Joint Bookrunning
Managers:
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Banc of America Securities LLC,
Citigroup Global
Markets Inc. and X.X.
Xxxxxx Securities Inc.
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Senior Co-Managers:
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Barclays Capital Inc., Credit
Suisse Securities (USA) LLC, Xxxxxxx, Sachs & Co.,
Xxxxxx Xxxxxxx & Co. Incorporated, Greenwich
Capital Markets, Inc., UBS Securities LLC, Wachovia Capital Markets,
LLC
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Co-Managers:
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BNY Capital Markets, Inc., Fifth
Third Securities,
Inc., Lazard Capital Markets LLC, Xxxxxx Brothers Inc., NatCity
Investments, Inc., Xxxxx Xxxxxxx & Co., PNC Capital Markets LLC,
SunTrust Xxxxxxxx Xxxxxxxx, Inc., Xxxxx Fargo Securities,
LLC
|
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CUSIP
Number:
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008117
AM5
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ISIN
Number:
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US008117AM56
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Aetna
Inc. has filed a registration statement (including a prospectus) with the SEC
for the offering to which this communication relates. Before you invest, you
should read the prospectus in that registration statement and the other
documents Aetna Inc. has filed with the SEC for more complete information about
Aetna Inc. and this offering. You may get these documents for free by visiting
the SEC Web site at xxx.xxx.xxx. Alternatively, copies of the
prospectus and the prospectus supplement may be obtained from Banc of America
Securities LLC by calling 1-800-294-1322, from Citigroup Global Markets Inc. by
calling 1-877-858-5407 or from X.X. Xxxxxx Securities Inc. by calling
000-000-0000.
13
