El Paso begins $750 million tender offer for 10 series of notes

By Angela McDaniels

Tacoma, Wash., July 13 - El Paso Corp. began tender offers for 10 series of its outstanding senior notes, according to a company news release.

The offers will expire at 11:59 p.m. ET on Aug. 9.

The company is offering to purchase any and all of the following:

• $570,000 of 9 5/8% senior debentures due 2012 at 107;

• $27,583,000 of 9 5/8% senior notes due 2012 at 107;

• $67,876,000 of 8¼% senior notes due 2016 at 114;

• $896,000 of 6.95% senior debentures due 2028 at 112.5;

• $173,534,000 of 6.95% senior notes due 2028 at 112.5;

• $236,000 of 7.42% senior debentures due 2037 at 117; and

• $160,218,000 of 7.42% senior notes due 2037 at 117.

Each of these prices includes an early tender payment of 3% of par for notes tendered by 5 p.m. ET on July 26, the early tender date.

The 9 5/8% debentures and 6.95% debentures were originally issued by Coastal Corp. and were exchanged for El Paso notes in December 2005. The company said the amounts outstanding for these debentures are small positions that were not exchanged in that exchange offer and were assumed by El Paso on Dec. 31, 2005.

The company is also offering to purchase the following notes through a Dutch auction offer:

• $375 million of 6 7/8% senior notes due 2014;

• $900 million of 7% senior notes due 2017; and

• $575 million of 7¼% senior notes due 2018.

The maximum amount spent to purchase these notes, excluding accrued interest, will be capped at $750 million minus the amount paid for the notes purchased in the any and all offer.

The acceptable bid price range is 111.5 to 114.5 for the 6 7/8% notes and 113.5 to 116.5 for the 7% notes and 7¼% notes. These ranges represent the minimum bid price plus a bid premium of up to 3% of par. They also include the early tender payment.

The clearing premium will be the lowest single premium that will allow the company to spend the maximum Dutch auction tender offer amount for notes tendered with a bid premium equal to or less than the clearing premium.

However, if the number of Dutch auction notes that are tendered would result in El Paso spending less than the cap, the clearing premium will be the highest bid premium received.

If the amount of notes tendered at or above the clearing premium would cause El Paso to spend more than the cap, the company will first accept all Dutch auction notes tendered at a bid premium less than the clearing premium and then notes tendered with a bid premium equal to the clearing premium on a prorated basis.

In all cases, the company will also pay accrued interest up to but excluding the settlement date.

The company has an early settlement option for notes tendered by the early tender date.

The dealer managers are Citigroup Global Markets Inc. (800 558-3745 or 212 723-6106) and Deutsche Bank Securities Inc. (855 287-1922 or 212 250-7527). The depositary and information agent is Global Bondholder Services Corp. (212 430-3774 for banks and brokers, others call 866 952-2200).

El Paso is a Houston-based natural gas provider.

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