Travelers 2003 Annual Report Download - page 127

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125
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. DEBT, Continued
On March 11, 2003, TPC issued $1.400 billion of senior notes comprised of $400.0 million of 3.75% senior
notes due March 15, 2008, $500.0 million of 5.00% senior notes due March 15, 2013 and $500.0 million of
6.375% senior notes due March 15, 2033. The notes pay interest semi-annually on March 15 and September 15
of each year, beginning September 15, 2003, are senior unsecured obligations and rank equally with all of TPC’s
other senior unsecured indebtedness. TPC may redeem some or all of the notes prior to maturity by paying a
“make-whole” premium based on U.S. Treasury rates. The net proceeds from the sale of these notes were
contributed to TIGHI, so that TIGHI could prepay and refinance $500.0 million of 3.60% indebtedness to
Citigroup and to redeem $900.0 million aggregate principal amount of TIGHI’s 8.00% to 8.08% junior
subordinated debt securities held by subsidiary trusts. These trusts, in turn, used these funds to redeem $900.0
million of preferred capital securities on April 9, 2003.
These senior notes were sold to qualified institutional buyers as defined under Rule 144A under the Securities
Act of 1933 (the Securities Act) and outside the United States in reliance on Regulation S under the Securities
Act. Accordingly, the notes (the restricted notes) were not registered under the Securities Act or any state
securities laws and could not be transferred or resold except pursuant to certain exemptions. As part of this
offering, TPC agreed to file a registration statement under the Securities Act to permit the exchange of the notes
for registered notes (the Exchange Notes) having terms identical to those of the senior notes described above
(Exchange Offer). On April 14, 2003, TPC initiated the Exchange Offer pursuant to a Form S-4 that was filed
with the Securities and Exchange Commission. Accordingly, each series of Exchange Notes has been registered
under the Securities Act, and the transfer restrictions and registration rights relating to the restricted notes do not
apply to the Exchange Notes. As of May 13, 2003 (the Expiration Date of the Exchange Offer), 99.8%, 99.4%
and 100% of TPC’s 5, 10, and 30-year restricted notes, respectively, were exchanged for Exchange Notes.
TPC’s primary source of funds for debt service is dividends from subsidiaries, which are subject to various
restrictions. See note 10.