Sabic Capital I begins exchange offer for Sabic Europe's 4½% bonds

By Angela McDaniels

Tacoma, Wash., Dec. 1 - Sabic Capital I BV began an offer to issue euro-denominated 4½% guaranteed bonds due 2013 guaranteed by Saudi Basic Industries Corp. in exchange for Sabic Europe BV's €750 million 4½% bonds due 2013.

According to a company news release, the Sabic group's strategy is to issue securities into the eurobond market through specific finance vehicles. The exchange offer is being held to help consolidate these securities into a single finance vehicle.

Bondholders who exchange will receive €50,000 of new bonds for each €50,000 of existing bonds. Accrued interest will be included in the first interest payment made on the new bonds.

In addition, bondholders who exchange by the early instruction deadline will receive a €50 cash payment for every €50,000 of bonds exchanged.

The offer began on Nov. 24 and will expire at noon ET on Dec. 12. The early instruction deadline is noon ET on Dec. 5.

The company is also asking bondholders to approve a modification to the bond terms that would require Sabic Europe to redeem at par any bonds that remain outstanding after the exchange offer. Payment would be made in new bonds rather than cash.

Bondholders will vote on the proposed modification at a meeting on Dec. 16. The company said that if the modification is approved, it will redeem the bonds on Dec. 19, which is also the settlement date for the exchange offer.

By exchanging their bonds, holders will be agreeing to the modification.

The exchange offer is not being made in the United States, but the company said U.S. persons can receive an amount equal to the early instruction premium by delivering an ineligibility confirmation by the early instruction deadline.

HSBC Bank plc (+44 20 7991 5874 or +44 20 7991 5880) and J.P. Morgan Securities Ltd. (+44 20 7779 2468 or +44 207325 5266) are the dealer managers. Lucid Issuer Services Ltd. (+44 20 7704 0880) is the exchange agent.

Sabic is a Riyadh, Saudi Arabia, manufacturer of chemicals, fertilizers, plastics and metals.

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