Petrobras prices capped tender offers for 20 notes in two parts

By Marisa Wong

Los Angeles, July 12 – Petroleo Brasileiro SA – Petrobras announced the consideration for wholly owned subsidiary Petrobras Global Finance BV’s cash tender offers to purchase for cash (i) its notes from 12 series (tender group 1) for an aggregate purchase price, excluding accrued interest, of up to $750 million and (ii) notes from eight series (tender group 2) for an aggregate purchase price, excluding accrued interest, of up to $750 million.

The offers began on July 6.

Pricing was calculated at 11 a.m. ET on July 12.

Tender group 1

Under the first group of offers, Petrobras Global Finance is offering to purchase the following notes, listed in order of acceptance priority level, with pricing per $1,000, €1,000 or £1,000 of notes:

• $593,396,000 outstanding 6¼% global notes due March 2024 (ISIN: US71647NAM11) at $1,025.47, with pricing based on the 3% U.S. Treasury due June 30, 2024 and a fixed spread of 163 basis points;

• €310.66 million outstanding 4¾% global notes due January 2025 (ISIN: XS0982711714) at €1,017.45, with pricing based on the January 2025 interpolated swap rate and fixed spread of 276 bps;

• $663,099,000 outstanding 5.299% global notes due January 2025 (ISIN: US71647NAT63, US71647NAV10, USN6945AAJ62) at $1,018.00, with pricing based on the 2 7/8% U.S. Treasury due June 15, 2025 and a fixed spread of 161 bps;

• $446,205,000 outstanding 8¾% global notes due May 2026 (ISIN: US71647NAQ25) at $1,125.48, with pricing based on the 3¼% U.S. Treasury due June 30, 2027 and a fixed spread of 213 bps;

• £566.11 million outstanding 6¼% global notes due December 2026 (ISIN: XS0718502007) at £985.36, with pricing based on the 3/8% U.K. Treasury due Oct. 22, 2026 and a fixed spread of 484 bps;

• $928,947,000 outstanding 7 3/8% global notes due January 2027 (ISIN: US71647NAS80) at $1,062.92, with pricing based on the 3¼% U.S. Treasury due June 30, 2027 and a fixed spread of 278 bps;

• $1,266,485,000 outstanding 5.999% global notes due January 2028 (ISIN: US71647NAW92, USN6945AAK36, US71647NAY58) at $1,000.44, with pricing based on the 3¼% U.S. Treasury due June 30, 2027 and a fixed spread of 300 bps;

• $634,952,000 outstanding 5¾% global notes due February 2029 (ISIN: US71647NAZ24) at $979.05, with pricing based on the 2 7/8% U.S. Treasury due May 15, 2032 and a fixed spread of 323 bps;

• £345,965,000 outstanding 5 3/8% global notes due October 2029 (ISIN: XS0835891838) at £897.62, with pricing based on the ½% U.K. Treasury due Jan. 31, 2029 and a fixed spread of 535 bps;

• $716,179,000 outstanding 5.093% global notes due January 2030 (ISIN: US71647NBE85, US71647NBF50, USN6945AAL19) at $928.56, with pricing based on the 2 7/8% U.S. Treasury due May 15, 2032 and a fixed spread of 339 bps;

• $1,422,035,000 outstanding 5.6% global notes due January 2031 (ISIN: US71647NBH17) with a call date on Oct. 3 2030 at $935.09, with pricing based on the 2 7/8% U.S. Treasury due May 15, 2032 and a fixed spread of 370 bps; and

• £436,759,000 outstanding 6 5/8% global notes due January 2034 (ISIN: XS0982711474) at £933.56, with pricing based on the 4½% U.K. Treasury due Sept. 7, 2034 and a fixed spread of 519 bps.

Tender group 2

Under the second group of offers, Petrobras Global Finance is offering to purchase the following notes, listed in order of acceptance priority level, with pricing per $1,000 of notes:

• $993.78 million outstanding 5½% global notes due June 2051 (ISIN: US71647NBJ72) with a par call date on Dec. 10, 2050 at $780.84, with pricing based on the 2¼% U.S. Treasury due Feb. 15, 2052 and a fixed spread of 423 bps;

• $400,753,000 outstanding 5 5/8% global notes due May 2043 (ISIN: US71647NAA72) at $853.58, with pricing based on the 3¼% U.S. Treasury due May 15, 2042 and a fixed spread of 362 bps;

• $616,139,000 outstanding 6¾% global notes due June 2050 (ISIN: US71647NBG34) with a par call date on Dec. 3, 2049 at $887.78, with pricing based on the 2¼% U.S. Treasury due Feb. 15, 2052 and a fixed spread of 463 bps;

• $2,162,705,000 outstanding 6.85% global notes due June 2115 (ISIN: US71647NAN93) at $839.85, with pricing based on the 2¼% U.S. Treasury due Feb. 15, 2052 and a fixed spread of 505 bps;

• $996,602,000 outstanding 6.9% global notes due March 2049 (ISIN: US71647NBD03) at $914.41, with pricing based on the 2¼% U.S. Treasury due Feb. 15, 2052 and a fixed spread of 455 bps;

• $766,874,000 outstanding 6¾% global notes due January 2041 (ISIN: US71645WAS08) at $948.84, with pricing based on the 3¼% U.S. Treasury due May 15, 2042 and a fixed spread of 391 bps;

• $786,965,000 outstanding 6 7/8% global notes due January 2040 (ISIN: US71645WAQ42) at $961.59, with pricing based on the 3¼% U.S. Treasury due May 15, 2042 and a fixed spread of 392 bps; and

• $1,023,732,000 outstanding 7¼% global notes due March 2044 (ISIN: US71647NAK54) at $968.50, with pricing based on the 3¼% U.S. Treasury due May 15, 2042 and a fixed spread of 420 bps.

Pricing

The considerations listed were based on the yield calculated to the applicable maturity date or par call date.

Accrued interest will also be paid to but excluding the settlement date.

Deadlines

The offers will expire at 5 p.m. ET on July 12. Tenders may be withdrawn at any time before that deadline.

Tenders under guaranteed delivery procedures are due by 5 p.m. ET on July 14.

Settlement is expected to be on July 15.

Conditions

The offers are not contingent on the tender of any minimum principal amount of notes.

The tender offers under one group of notes are not conditioned on the tender offers for the other group.

Each offer within a tender group is independent of the other offers of that group and is not conditioned on the offers in the other group.

Tender cap details

As previously announced, the company’s obligation to complete an offer for a series within a tender group is conditioned on the aggregate consideration for the offers with respect to that tender group, excluding accrued interest, not exceeding the applicable maximum consideration for that tender group, currently $750 million for each group.

If this maximum consideration condition is not satisfied with respect to each series of notes within a tender group, for (i) a series of notes within that tender group (the “first non-covered notes”) for which the cap for that group is less than the sum of the aggregate consideration for all tendered first non-covered notes for that tender group and the aggregate consideration for all tendered notes of all series for such tender group, having a higher acceptance priority level than the first non-covered notes for that tender group and (ii) all series of notes for that tender group with an acceptance priority level lower than the first non-covered notes for that group (together with the first non-covered notes, the “non-covered notes”), then the company may, at any time at or prior to the expiration date:

• Terminate an offer with respect to one or more series of non-covered notes for that tender group for which the maximum consideration condition for that group has not been satisfied and promptly return all tendered notes of that series and of any series of non-covered notes for that tender group to the respective holders; or

• Waive the maximum consideration condition with respect to one or more series of non-covered notes for that tender group and accept all tendered notes of that series and of any series of notes within that tender group having a higher acceptance priority level; or

• If there is any series of non-covered notes for that tender group for which (i) the aggregate consideration necessary to purchase all tendered notes of that series, plus (ii) the aggregate consideration necessary to purchase all tendered notes of all series having a higher acceptance priority level than that series of notes, other than any non-covered notes, are equal to, or less than, the maximum consideration for that tender group, accept all tendered notes of all series having a lower acceptance priority level within that tender group, until there is no series of notes with a higher or lower acceptance priority level within that tender group to be considered for purchase for which the conditions above are met.

It is possible that a series of notes with a particular acceptance priority level within a tender group will fail to meet the conditions and therefore will not be accepted for purchase even if one or more series with a higher or lower acceptance priority level within that tender group is accepted for purchase.

If any series of notes is accepted for purchase under the offers for a tender group, all notes of that series that are tendered will be accepted for purchase.

For purposes of determining whether the maximum consideration condition for each tender group is satisfied, the company will assume that all notes tendered under the guaranteed delivery procedures will be duly delivered at or prior to the guaranteed delivery date and the company will not subsequently adjust the acceptance of the notes in accordance with the acceptance priority levels if any such notes are not so delivered.

The exchange rates to be used to calculate the maximum consideration payable for each tender group is £1.1888 per $1.00 and €1.0050 per $1.00, the applicable exchange rates as of 11 a.m. ET on July 12, the company noted.

BofA Securities, Inc. (646 855-8988 or 888 292-0070), Bradesco BBI SA (646 432-6643), Credit Agricole Securities (USA) Inc. (212 261-7802 or 866 807-6030), Deutsche Bank Securities Inc. (212 250-2955 or 866 627-0391), J.P. Morgan Securities LLC (212 834-2064 or 866 834-4666) and SMBC Nikko Securities America, Inc. (212 224-5328 or 888 284-9760) are dealer managers for the offers.

Global Bondholder Services Corp. (855 654-2015 or 212 430-3774 for banks and brokers; https://www.gbsc-usa.com/Petrobras/) is the depositary and information agent.

The oil and gas company is based in Rio de Janeiro.

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