Pemex ups waterfall tender cap for three note series by $500 million

By Susanna Moon

Chicago, Feb. 2 – Petroleos Mexicanos said it increased the waterfall tender cap in the offers for three series of notes to $900 million from $400 million.

As announced Feb. 1 the issuer is offering to swap out two series of notes and tendering for several more issues.

Pemex plans to price an offering of dollar-denominated global notes in one or more series as well as “a series of liability management transactions targeting ... short-term maturity notes due 2019 and 2020 and long-term maturity bonds due 2044 and 2046,” according to a previous company announcement.

The waterfall tender cap consists of the maximum aggregate purchase price including accrued interest, according to a company update on Friday.

In the exchange, the company is offering to issue new securities due 2048 under two separate private offers for holders who are qualified institutional buyers under Rule 144A or non-U.S. persons under Rule 902.

On Friday, Pemex priced $2.5 billion of 5.35% notes due Feb. 12, 2028 at par. The new notes will be issued under the company's $92 billion medium-term notes program, series C.

Pemex also priced $1.5 billion of 6.35% bonds due at par.

Proceeds of the 5.35% notes will be used to fund the tender offers with any remainder to finance the company’s investment program and for working capital. For the 2048 bonds, proceeds will be used to finance the tenders with any remainder for general corporate purposes, including the repayment of debt.

As previously announced, the exchange value will be as follows for each $1,000 principal amount:

• $926.25 of new bonds due 2048 for the $2,658,039,000 5½% bonds due 2044; and

• $927.50 of new bonds due 2048 for the $3 billion 5 5/8% bonds due 2046.

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

The exchange will continue until 5 p.m. ET on Feb. 7. Tendered notes may be withdrawn at any time before the offers end.

Settlement is expected to occur on Feb. 12.

The offers are contingent on completion of the corresponding retail tender offer as well as the issue of new notes.

Pemex plans to issue the new notes under its $92 billion medium-term notes program, series C, under Rule 144A and Regulation S with proceeds to be used to purchase all or some of several series of outstanding notes maturing in 2019 and 2020.

Global Bondholder Services Corp. (866 470-4500 or 212 430-3774) is the information agent and exchange agent.

Retail tenders

Pemex said that in order to comply with rules for abbreviated exchange offers, it is required to hold a concurrent offer to purchase those same bonds for cash in retail tender offers from holders who are not eligible for the exchange.

Holders who are eligible to participate in the exchange cannot take part in the retail offers, the release noted.

The retail tender offers also will end at 5 p.m. ET on Feb. 7 with settlement following on Feb. 12.

In the tender, the company is offering to purchase up to $100 million of each series of notes at a price for each $1,000 principal amount of $926.25 for the 5½% bonds and $927.50 for the 5 5/8% bonds.

The offers are contingent on completion of the corresponding exchange offer as well as the issue of new notes.

Global Bondholder Services Corp. (866 470-4500, 212 430-3774 or gbsc-usa.com/Pemex/) is the information agent and tender agent.

More tender offers

The third liability management transaction consists of five separate offers to purchase for cash any and all of two series of notes as well as waterfall tender offers for an aggregate purchase price of up to $400 million for three more note issues.

Along with the any and all offers, Pemex said it is soliciting consents to amend the notes to shorten the minimum call notice.

The tender offers and consent solicitation will remain open until 11:59 p.m. ET on March 1.

Tendered notes may be withdrawn before 5 p.m. ET on Feb. 14.

In the any and all offers, the total purchase price for each $1,000 principal amount will be as follows:

• $1,009.64 for the $327,409,000 3 1/8% notes due 2019; and

• $1,029.64 for the $750 million 5½% notes due 2019.

For the waterfall offers, the total purchase price for each $1,000 principal amount will be as follows, with the notes listed in order of priority acceptance levels:

• $1,065.92 for the $1,312,275,000 8% notes due 2019 with a maximum series cap of $100 million, unchanged;

• $1,065.96 for the $1 billion 6% notes due 2020 with a maximum series cap of $200 million, increased from $100 million; and

• $1,017.50 for the $1.5 billion 3½% notes due 2020 with a maximum series cap of $600 million increased from $200 million.

For each series, the total purchase price includes an early tender premium of $30.00 per $1,000 principal amount of notes tendered before the early deadline of 5 p.m. ET on Feb. 14.

Global Bondholder Services Corp. (866 470-4500) is the depositary and information agent for the tender offers and consent solicitation.

Citigroup Global Markets Inc. (800 558-3745 or 212 723-6106) and BofA Merrill Lynch (888 292-0700 or 646 855-8998) are the dealer managers.

Pemex is a Mexico City-based oil and gas company.

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