Venezuela's PDVSA wraps tender for Petrozuata's 7.63%, 8.22%, 8.37% bonds

By Jennifer Chiou

New York, Sept. 16 - Petroleos de Venezuela, SA announced the results of its cash tender offer for any and all of Petrozuata Finance Inc.'s $61.3 million of 7.63% bonds due 2009, $618.9 million of 8.22% bonds due 2017 and $75 million of 8.37% bonds due 2022.

As of the end of the offer at midnight ET on Friday, a total of $739.81 million, or 97.96%, of the bonds were tendered. PDVSA said it has purchased all validly tendered bonds for a total purchase price of $824.99 million, including accrued interest, a premium above par and a consent fee in the aggregate amount of $85.18 million.

The bonds are linked to the extra-heavy crude oil project in the Orinoco Belt region.

For each $1,000 principal amount, the company said it paid $1,039.14 for the 7.63% bonds, $1,113.12 for the 8.22% bonds and $1,165.63 for the 8.37% bonds.

PDVSA said it also paid to holders a consent fee in the amount equal to 0.25% of the principal amount of bonds tendered. Therefore, the total consideration including the consent fee was $1,041.64 per $1,000 principal amount of 7.63% bonds, $1,115.62 for the 8.22% bonds and $1,168.13 for the 8.37% bonds.

The company said it determined the payouts using a fixed spread of 30 basis points over the yields, interpolated on a straight-line basis, of the 4 5/8% Treasury due Nov. 30, 2008 and the 3 3/8% Treasury due Dec. 15, 2008 for the 7.63% bonds; a fixed spread of 50 bps over the yields of the 4¼% Treasury due Nov. 15, 2013 and 4% Treasury due Feb. 15, 2014 for the 8.22% bonds and a fixed spread of 50 bps over the yields of the 7¼% Treasury due Aug. 15, 2022 and the 7 5/8% Treasury due Nov. 15, 2022 for the 8.37% bonds.

The company added that the premium was about equal to 33% of the redemption premium that would be payable on each series of bonds if they were to be redeemed.

The payment date was Monday.

As of 5 p.m. ET on Sept. 11, PDVSA said it had received valid tenders and consents from holders of $693.9 million, or 91.9%, of the bonds.

The offer began on Aug. 14.

PDVSA was soliciting consents to eliminate substantially all of the restrictive covenants and events of default in the indenture; to release all of the collateral securing the bonds; to waive any and all prior and existing defaults, prospective defaults and events of default under the indenture, the common security agreement and the other financing documents; to adopt certain proposed amendments to the common security agreement, the indenture and the other financing documents; and to terminate the common security agreement.

The tender offer was conditioned on the receipt of tenders for at least 75% of the bonds as well as the compliance by certain holders with their obligations under a lock-up agreement with PDVSA. Those holders indicated that they owned or represented the owners of 77.23% of all outstanding bonds.

Lazard Freres & Co. LLC was the dealer manager and solicitation agent (call collect 312 407-6674). Global Bondholder Services Corp. was the information agent (call collect 212 430-3774 or 866 470-3700).

PDVSA is Venezuela's state-owned oil company.

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