El Paso earnings restatement delays $750 million convertible preferred until April 11 week

By Ronda Fears

Nashville, April 8 - Pricing for El Paso Corp.'s $750 million of convertible perpetual preferreds, still talked with a 4.375% to 4.875% dividend and 25% to 30% initial conversion premium, has been delayed until early in the week of April 11, a source close to the deal said.

When the Rule 144A deal was launched Tuesday, it was scheduled to price after the close Thursday.

But late Thursday, El Paso announced that it will restate its 2003 fourth quarter and annual 2003 consolidated earnings to reclassify $82 million in deferred tax benefits related to the sale of its Canadian exploration and production operations.

The company said the restatement will not impact 2003 net income, EBIT or cash flow and that it has no impact on financials for 2004 and 2002. The 2003 restatement will increase the loss per share from continuing operations from $0.87 per share to $1.01 per share and make a corresponding benefit to discontinued operations.

Deutsche Bank Securities and Banc of America Securities are the joint bookrunners. Citigroup Global Markets Inc., Credit Suisse First Boston, Morgan Stanley, Merrill Lynch, Goldman Sachs, ABN Amro, BNP Paribas, Scotia Capital, SG Cowen, Hypo and Fortis are the co-managers.

The issue will be non-callable for five years, then with a 130% hurdle through maturity.

A $150 million greenshoe is available.

The Houston-based power company plans to use proceeds, plus cash on hand if needed, to redeem the $300 million of 8.25% cumulative preferred stock of subsidiary El Paso Tennessee Pipeline Co. and to prepay the estimated $442 million Western Energy settlement obligations.

El Paso shares closed Friday down 6 cents, or 0.56%, at $10.56.

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