Notes Offering

On November 18, 2019, Vector Group Ltd. (the “Company”) completed the sale of an additional $230 million in aggregate principal amount of its 10.500% senior notes due 2026 (the “Notes”) to qualified institutional buyers to Rule 144A and to Regulation S in a private offering exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”). The Notes were issued to the Indenture, dated as of November 2, 2018 (the “Indenture”), among the Company, the subsidiaries of the Company party thereto as note guarantors (the “Guarantors”) and U.S. Bank National Association, as trustee (the “Trustee”), as supplemented by a First Supplemental Indenture, dated as of November 18, 2019 (the “First Supplemental Indenture”). The terms of the Notes are discussed under Item 2.03 below.

The Notes have not been registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws.

First Supplemental Indenture and Additional 10.500% Senior Notes due 2026

On November 18, 2019, the Company completed the sale of an additional $230 million in aggregate principal amount of its 10.500% senior notes due 2026 (the “Notes”) to qualified institutional buyers to Rule 144A and to Regulation S in a private offering exempt from the registration requirements of the Securities Act. The Notes were issued under the Indenture, as supplemented by the First Supplemental Indenture.

The aggregate net cash proceeds from the sale of the Notes were approximately $220.4 million after deducting the initial purchaser’s discount and estimated expenses and fees payable by the Company in connection with the Notes offering. The Company intends to use the net cash proceeds from the offering to redeem, repurchase, repay or otherwise retire the Company’s outstanding 5.5% Variable Interest Senior Convertible Notes due 2020 (the “2020 Convertible Notes”), including accrued interest thereon, at, or prior to, their maturity, to pay costs and expenses in connection with the offering of the Notes and the transactions contemplated thereby, and for general corporate purposes. Pending the application of the net proceeds of this offering, the Company intends to invest such net proceeds temporarily in investment grade securities, money market funds, bank deposit accounts or similar short-term investments.

The Company will pay cash interest at a rate of 10.500% per year, payable semi-annually on May 1 and November 1 of each year, beginning on May 1, 2020. Interest will accrue from November 1, 2019. Interest on overdue principal and interest, if any, will accrue at a rate that is higher than the then applicable interest rate on the Notes. The Company will make each interest payment to the holders of record on the immediately preceding April 15 and October 15, as the case may be. The Notes mature on November 1, 2026, unless earlier repurchased or redeemed in accordance with their terms, and otherwise have the same terms as the Company’s existing 10.500% notes, other than the date of issue and the initial price. After giving effect to the issuance of the Notes, the Company has outstanding $555,000,000 aggregate principal amount of its 10.500% Senior Notes due 2026.

The Notes are fully and unconditionally guaranteed on a joint and several basis by all of the wholly owned domestic subsidiaries of the Company that are engaged in the conduct of the Company’s cigarette businesses, and by DER Holdings LLC, its wholly owned subsidiary through which the Company indirectly owns a 50% interest in Douglas Elliman Realty, LLC, which operates the largest residential brokerage company in the New York metropolitan area and also conducts residential real estate brokerage operations in Florida, California, Connecticut, Massachusetts and Colorado. The Notes are not guaranteed by New Valley LLC, or any subsidiaries of New Valley LLC, other than DER Holdings LLC. The Notes are not secured by any of the assets of the Company or the guarantors.

The foregoing summaries of the Indenture and First Supplemental Indenture do not purport to be complete and are qualified in their entirety by reference to the Indenture, which is attached hereto as Exhibit 4.1, and the First Supplemental Indenture, which is attached hereto as Exhibit 4.2, each of which is incorporated herein by reference. A copy of the Indenture was filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on November 2, 2018.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

VECTOR GROUP LTD Exhibit
EX-4.2 2 ex42_2019noteoffering.htm EXHIBIT 4.2 Exhibit Exhibit 4.2VECTOR GROUP LTD.AND EACH OF THE GUARANTORS PARTY HERETO10.500% SENIOR NOTES DUE 2026FIRST SUPPLEMENTAL INDENTUREDated as of November 18,…
To view the full exhibit click here

About VECTOR GROUP LTD. (NYSE:VGR)

Vector Group Ltd. is a holding company. The Company is engaged in the manufacture and sale of cigarettes in the United States through its Liggett Group LLC (Liggett) and Vector Tobacco Inc. (Vector Tobacco) subsidiaries; the sale of electronic cigarettes (e-cigarettes) in the United States through its Zoom E-Cigs LLC (Zoom) subsidiary, and the real estate business through its New Valley LLC subsidiary, which is seeking to acquire or invest in additional real estate properties or projects. The Company’s business segments include Tobacco, E-Cigarettes and Real Estate. The Tobacco segment consists of the manufacture and sale of cigarettes. The E-Cigarettes segment includes the operations of the Company’s e-cigarette business. The Real Estate segment includes the Company’s investments in New Valley LLC, which includes Douglas Elliman, Escena, Sagaponack and investments in real estate ventures. Liggett’s brand portfolio includes EAGLE 20’s, PYRAMID, GRAND PRIX, LIGGETT SELECT, EVE and USA.