Chile's Transelec offers to buy back up to $220 million 7 7/8% notes

By Angela McDaniels

Tacoma, Wash., July 15 - Transelec SA has begun a tender offer to purchase up to $220 million principal amount of its $465 million of 7 7/8% senior notes due April 15, 2011, according to a company news release.

The payment on offer is equal to the present value on the payment date of $1,000 per $1,000 principal amount of notes plus the present value on the payment date of interest up to but excluding maturity, determined on the basis of the tender offer yield, and minus accrued interest up to but excluding the payment date.

The tender offer yield is equal to the sum of the bidside yield to maturity of the 1 1/8% U.S. Treasury note due June 30, 2011 based on the bid price as of 2 p.m. ET on Aug. 11 plus 220 basis points.

Holders will also receive accrued interest up to but excluding the payment date.

The company said it will announce the pricing information on Aug. 12.

The payout will include an early tender payment of $30.00 for each $1,000 principal amount of notes tendered by 5 p.m. ET on July 28, which is the early tender date.

The tender offer will expire at 8 a.m. ET on Aug. 14.

If the principal amount of the notes tendered exceeds the cap, the principal amount of notes purchased will be prorated.

The offer is conditioned on the receipt of tenders for at least $100 million principal amount of notes and the company obtaining enough financing to fund the offer. Transelec plans to raise the financing through one or more debt offerings in the local Chilean market.

The dealer manager is HSBC Securities (USA) Inc. (call liability management group at 888 HSBC-4LM or 212 525-5552), and the information agent is D.F. King & Co., Inc. (800 967-7921 or collect at 212 269-5550).

Transelec is an electricity transmission company based in Santiago, Chile.

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