El Paso begins tender for 7 5/8% notes

By Jennifer Chiou

New York, March 22 - El Paso Corp. said its subsidiary, El Paso Natural Gas Co., began a tender offer for any and all of its $355 million of 7 5/8% notes due 2010.

The company is also soliciting consents to amend the note indenture.

The tender offer will expire at midnight ET on April 18.

The tender consideration will include an early tender premium of $10.00 per $1,000 principal amount for noteholders who tender by 5 p.m. ET on April 4, the consent deadline.

For each $1,000 principal amount of notes, the company said it will determine the payout using a fixed spread of 50 basis points over the yield based on the bid-side price of the 3.875% Treasury note due July 31, 2007.

Pricing will be set at 2 p.m. ET on April 4. El Paso said it intends to have an initial settlement for notes tendered by the early deadline on April 5.

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

The offer is conditioned on the receipt of tenders from holders of a majority of notes, the execution of a supplemental indenture and the completion of the sale of new notes.

Citigroup Corporate and Investment Banking is the dealer manager (800 558-3745 or call collect 212 723-6106). Global Bondholder Services Corp. is the information agent (866 952-2200 or call collect 212 430-3774).

El Paso is a Houston-based provider of natural gas and related products.

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