Premcor tenders for 7¾% notes due 2012

By Jennifer Chiou

New York, Aug. 8 - Premcor Inc. said its wholly owned subsidiary, The Premcor Refining Group Inc., has begun a tender offer and consent solicitation for any and all of its 7¾% senior subordinated notes due 2012.

The consent solicitation is for proposed amendments that will eliminate substantially all of the restrictive covenants on the notes' indenture. A valid tender is considered a consent.

The Old Greenwich, Conn., independent petroleum refiner said the offer is part of its proposed merger between Valero Energy Corp. and Premcor Inc., under which Premcor's subsidiary will become an indirect, wholly owned subsidiary of Valero.

The company will pay 65% of the present value of scheduled payments to the notes' first call date, discounted using the 3¾% Treasury due May 15, 2008 plus 50 basis points and 35% of $1,077.50, the equity clawback price. The total includes a $45.00 per $1,000 principal amount consent payment.

Pricing will be set at 2 p.m. ET on Aug. 22.

The consent deadline is at 5 p.m. ET on Aug. 19. The offer expires at midnight ET on Sept. 2, unless extended.

The tender offer and consent solicitation are conditioned upon the completion of the merger.

Barclays Capital Inc. is dealer manager and solicitation agent (866-307-8991 or call collect 212 412-4072).

Georgeson Shareholder care of Computershare Trust Co. of New York is depositary (866 391-7007 or call collect at 212-440-9800).

Valero is a San Antonio based refinery owner.

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