Argentina holders tender $8.48 billion notes in exchange offer so far

By Angela McDaniels

Tacoma, Wash., May 24 - The Republic of Argentina said that holders of $8,477,990,276 eligible amount of securities had tendered into its exchange offer as of 5 p.m. ET on May 14, which was the early tender deadline.

Holders of $8,415,482,696 eligible amount elected the discount option, and holders of $62,507,580 eligible amount elected the par option, according to a news release from the republic.

Argentina has accepted all tenders received so far. Holders who elected the discount option can expect their exchanges to be settled early, on or about June 2. The settlement date for all other holders is expected to be Aug. 2.

Both the early and final settlement dates may occur over the course of several business days.

The offer began on April 30 and will expire at 5 p.m. ET on June 7.

Bonds eligible for participation are divided into two categories: those issued before 2005 and those issued in 2005.

The pre-2005 eligible securities total $18.3 billion, including $17.6 billion of principal and $700 million of accrued but unpaid interest as of Dec. 31, 2001, based on currency exchange rates in effect on Dec. 31, 2003.

All tenders are irrevocable.

Pre-2005 bonds

Holders of pre-2005 eligible securities can choose a discount option or a par option.

Those who choose the discount option will receive a combination of discount bonds due December 2033, 8.75% global bonds due June 2, 2017 and GDP-linked securities expiring no later than in December 2025.

The issue price for the global bonds is 90.11.

For each $1,000 eligible amount of dollar-denominated securities, the payout under this option will be $337 principal amount of discount bonds, $93 principal amount of global bonds and $1,000 notional amount of GDP-linked securities.

For each €1,000 eligible amount of euro-denominated securities, the payout under this option will be €337 of discount bonds, $110 of global bonds and €1,000 of GDP-linked securities.

For each £1,000 eligible amount of pound-denominated securities, the payout under this option will be €478 of discount bonds, $157 of global bonds and €1,419 of GDP-linked securities.

For each CHF 1,000 eligible amount of Swiss franc-denominated securities, the payout under this option will be €216 of discount bonds, $71 of global bonds and €640 of GDP-linked securities.

For each ¥100,000 eligible amount of yen-denominated securities, the payout under this option will be €249 of discount bonds, $81 of global bonds and €740 of GDP-linked securities.

For each Ps. 1,000 eligible amount of Argentine peso-denominated securities, the payout under this option will be Ps. 337 of discount bonds, $21 of global bonds and Ps. 1,000 of GDP-linked securities.

Those who choose the par option will receive par bonds due December 2038, a cash payment and GDP-linked securities.

Holders will also receive capitalized interest.

The discount bonds denominated in dollars, euros and Argentinean pesos will have coupons of 8.28%, 7.82% and 5.83%, respectively.

The par bonds denominated in dollars, euros and Argentinean pesos will have initial coupons of 2.5%, 2.26% and 1.18%, respectively. These will step up to 3.75%, 3.38% and 1.77%, respectively, on March 31, 2019 and to 5.25%, 4.74% and 2.48%, respectively, on March 31, 2029.

The GDP-linked securities will not pay interest. Argentina will make payments on these securities on Dec. 15 of each year, the amount of which will be based on its GDP.

For holders of bonds denominated in dollars, euros or Argentine pesos who elect the discount option, the principal amount of discount bonds to be received is equal to 33.7% of the eligible amount of the securities tendered, and those electing the par option will receive par bonds in a principal amount equal to 100% of the eligible amount of their tendered securities.

Holders of bonds denominated in pounds sterling who elect the discount option will receive a principal amount of discount bonds equal to 47.8% of the eligible amount of the securities they tender, and those electing the par option will receive par bonds in a principal amount equal to 141.9% of the eligible amount of their tendered securities.

For bonds denominated in Swiss francs, the ratios are 21.6% of par for those electing the discount option and 64% of par for those choosing the par option.

For bonds denominated in yen, the ratios are 24.9% of par for those electing the discount option and 74% of par for those choosing the par option.

The amount of global bonds to be issued to holders who chose the discount option will be a principal amount equal to $0.2907576, €0.2726930 or Ps. 0.2657117 for each $1.00, €1.00 or Ps. 1.00 eligible amount of securities exchanged.

The cash amount to be issued to holders who choose the par option will be $0.0823250, €0.0743000 or Ps. 0.0517113 for each $1.00, €1.00 or Ps. 1.00, respectively, original principal amount of par bonds received in exchange for tendered securities.

Holder can elect the par option for up to $50,000, €40,000, ₤30,000, CHF 60,000, ¥5,000,000 or Ps. 150,000, as the case may be, in outstanding principal amount of eligible securities.

In any case, the republic will issue no more than $2 billion of par bonds. If this option is oversubscribed, this option will be allocated on a pro rata basis. To the extent that a tender is prorated, it will be reallocated to the discount option.

2005 bonds

Holders of 2005 eligible securities also can choose either to receive discount bonds or par bonds.

Those who choose the discount option will receive a principal amount of discount bonds equal to 33.7% of the eligible amount of the securities they tender and those electing the par option will receive par bonds in a principal amount equal to 100% of the eligible amount of their tendered securities.

In each case, the amount of bonds received will be decreased by an amount determined using a series of factors that is dependent on the bonds exchanged.

Under the discount option, the principal amount of discount bonds to be received is $231 per $1,000 eligible amount of dollar-denominated bonds governed by New York law, $223 per $1,000 eligible amount of dollar-denominated bonds governed by Argentine law, €218 per €1,000 eligible amount of euro-denominated bonds and Ps. 196 per Ps. 1,000 eligible amount of Argentina peso-denominated bonds.

Under the par option, the principal amount of par bonds to be received is $235 per $1,000 eligible amount of dollar-denominated bonds governed by New York law, $228 per $1,000 eligible amount of dollar-denominated bonds governed by Argentine law, €227 per €1,000 eligible amount of euro-denominated bonds, Ps. 236 per Ps. 1,000 eligible amount of Argentina peso-denominated bonds and Ps. 320 per Ps. 1,000 eligible amount of Argentina peso-denominated quasi-par bonds.

Holders will also receive capitalized interest.

Large holders

Large holders - those holding $1 billion of notes - who elect the discount option and who tendered by 5 p.m. ET on May 14 will be eligible to receive the total considerations detailed above, and those who tender after that time will have the principal amount of global bonds received decreased by an amount equal to $0.01 per $1.00 eligible amount of securities accepted.

Cash offering

Concurrent with the exchange offer, Argentina is offering $1 billion principal amount of global bonds due 2017 for cash. The exchange offer is conditioned on the receipt of the proceeds from the offering.

The joint dealer managers are Barclays Capital Inc., Citigroup Global Markets Inc. and Deutsche Bank Securities Inc.

The exchange agent is Bank of New York Mellon (732 667-9754), and the information agent is Georgson Srl (66 742-4029, +39 06 42 17 17 77, +39 06 42 17 17 77, 800 189922, +39 06 42 17 17 17, 0800 000 1564 or +39 06 42 17 17 77).

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