Argentina extends early tender deadline in exchange offer by two days

By Angela McDaniels

Tacoma, Wash., May 12 - The Republic of Argentina extended the early tender deadline in the exchange offer for its bonds to 5 p.m. ET on May 14 from May 12, according to a news release.

The offer began on April 30. Bonds eligible for participation are divided into two categories: those issued before 2005 and those issued in 2005.

The pre-2005 eligible securities total $18.3 billion, including $17.6 billion of principal and $700 million of accrued but unpaid interest as of Dec. 31, 2001, based on currency exchange rates in effect on Dec. 31, 2003.

Pre-2005 bonds

Holders of pre-2005 eligible securities can choose a discount option or a par option.

Those who choose the discount option will receive a combination of discount bonds due December 2033, 8.75% global bonds due 2017 and GDP-linked securities expiring no later than in December 2025.

Those who choose the par option will receive par bonds due December 2038, a cash payment and GDP-linked securities.

The discount bonds denominated in dollars, euros and Argentinean pesos will have coupons of 8.28%, 7.82% and 5.83%, respectively.

The par bonds denominated in dollars, euros and Argentinean pesos will have initial coupons of 2.5%, 2.26% and 1.18%, respectively. These will step up to 3.75%, 3.38% and 1.77%, respectively, on March 31, 2019 and to 5.25%, 4.74% and 2.48%, respectively, on March 31, 2029.

The GDP-linked securities will not pay interest. Argentina will make payments on these securities on Dec. 15 of each year, the amount of which will be based on its GDP.

Holders of bonds denominated in dollars, euros or Argentine pesos who elect the discount option will receive a principal amount of discount bonds equal to 33.7% of the eligible amount of the securities they tender, and those electing the par option will receive par bonds in a principal amount equal to 100% of the eligible amount of their tendered securities.

Holders of bonds denominated in pounds sterling who elect the discount option will receive a principal amount of discount bonds equal to 47.8% of the eligible amount of the securities they tender, and those electing the par option will receive par bonds in a principal amount equal to 141.9% of the eligible amount of their tendered securities.

For bonds denominated in Swiss francs, the ratios are 21.6% of par for those electing the discount option and 64% of par for those choosing the par option.

For bonds denominated in yen, the ratios are 24.9% of par for those electing the discount option and 74% of par for those choosing the par option.

The amount of global bonds to be issued to holders who chose the discount option will be a principal amount equal to $0.2907576, €0.2726930 or Ps. 0.2657117 for each $1.00, €1.00 or Ps. 1.00 eligible amount of securities exchanged.

The cash amount to be issued to holders who choose the par option will be $0.0823250, €0.0743000 or Ps. 0.0517113 for each $1.00, €1.00 or Ps. 1.00, respectively, original principal amount of par bonds received in exchange for tendered securities.

The amount of GDP-linked securities to be issued to holders who will be a principal amount equal to the eligible amount of securities exchanged. This is the same for all holders, regardless of whether they elect or are allocated the Discount Option or the Par Option.

Holder can elect the par option for up to $50,000, €40,000, ₤30,000, CHF 60,000, ¥5,000,000 or Ps. 150,000, as the case may be, in outstanding principal amount of eligible securities.

In any case, the republic will issue no more than $2 billion of par bonds. If this option is oversubscribed, this option will be allocated on a pro rata basis. To the extent that a tender is prorated, it will be reallocated to the discount option.

Large holders - those holding $1 billion of notes - who elect the discount option and who tender by the early tender deadline will be eligible to receive the total consideration, and those who tender after that time will have the principal amount of global bonds received decreased by an amount equal to $0.01 per $1.00 eligible amount of securities accepted.

2005 bonds

Holders of 2005 eligible securities also can choose either to receive discount bonds or par bonds.

Those who choose the discount option will receive a principal amount of discount bonds equal to 33.7% of the eligible amount of the securities they tender and those electing the par option will receive par bonds in a principal amount equal to 100% of the eligible amount of their tendered securities.

In each case, the amount of bonds received will be decreased by an amount determined using a series of factors that is dependent on the bonds exchanged.

All tenders will be irrevocable.

The offer will expire at 5 p.m. ET on June 7.

Cash offering

Concurrent with the exchange offer, Argentina is offering $1 billion principal amount of global bonds due 2017 for cash. The exchange offer is conditioned on the receipt of the proceeds from the offering.

The joint dealer managers are Barclays Capital Inc., Citigroup Global Markets Inc. and Deutsche Bank Securities Inc.

The exchange agent is Bank of New York Mellon (732 667-9754), and the information agent is Georgson Srl (66 742-4029, +39 06 42 17 17 77, +39 06 42 17 17 77, 800 189922, +39 06 42 17 17 17, 0800 000 1564 or +39 06 42 17 17 77).

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