Gabon begins tender offer, exchange offer for 8.2% notes due 2017

By Angela McDaniels

Tacoma, Wash., Nov. 26 - The Gabonese Republic began an exchange offer and a tender offer for its $874,645,000 outstanding principal amount of 8.2% notes due 2017, according to a government announcement.

The offers will end at 5 p.m. ET on Dec. 4.

Gabon said the purpose of the exchange offer is to extend its debt maturity profile, and the purpose of the tender offer is to reduce its funding costs.

The republic plans to fund the tender offer with funds held in a reserve account managed by the International Bank for Reconstruction and Development.

Notes exchanged or purchased in the offer will be canceled.

Tender offer

In the tender offer, eligible holders are being offered $1,180 of cash for each $1,000 principal amount of existing notes plus accrued interest up to but excluding the settlement date, which is expected to be Dec. 12.

The republic plans to accept for purchase up to about $140 million principal amount of notes in the tender offer.

To participate in the tender offer, holders must tender at least $100,000 principal amount of notes.

Exchange offer

In the exchange offer, eligible holders are being offered a principal amount of new dollar-denominated fixed-rate notes equal to the principal amount of old notes exchanged multiplied by the exchange ratio.

The exchange ratio will equal the exchange price, $1,180 per $1,000 principal amount, divided by the new issue price, which is expected to be as close as possible to (but not above) par.

Holders will also receive accrued interest up to but excluding the settlement date.

The exchange offer is conditional on the issuance of at least $500 million principal amount of the new notes.

The new notes will be issued in the minimum denomination of $200,000. As a result, holders must offer to exchange a principal amount of old notes that will result in the issuance of at least $200,000 principal amount of new notes in order to participate.

The republic expects to announce the minimum yield at or above which the new issue yield will be fixed on Dec. 2. The new issue yield, which is intended to reflect the yield to maturity of the new notes on the settlement date, is expected to be determined at or around 1 p.m. ET on Dec. 5. The determination of the new issue yield will be based on feedback solicited by the dealer managers from the markets before the pricing time.

Following the determination of the new issue yield, the new issue price and the new issue coupon will be calculated on the basis of the new issue yield, and the new issue coupon will be set equal to the new notes yield.

The existing notes have a bullet redemption at maturity. Gabon currently expects the new notes will have either a bullet redemption at maturity or an amortizing/soft bullet redemption with equal payments of principal being made in years nine, 10 and 11.

Holders of existing notes issued outside the United States in accordance with Regulation S may choose to receive Regulation S new notes or Rule 144A new notes. Holders of existing notes issued in reliance on Rule 144A will receive Rule 144A new notes only.

The dealer managers are Citigroup Global Markets Ltd. (44 20 7986 8969, 800 558-3745, 212 723-6106 or liabilitymanagement.europe@citi.com), Deutsche Bank AG, London Branch (44 20 7545 8011 or liability.management@db.com) and Standard Chartered Bank (971 4 508 3700 or DCM.SSA@sc.com).

The exchange and tender agent is Citibank, NA, London Branch (44 20 7508 3867 or exchange.gats@citi.com).

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