Venezuela's PDVSA prices tender offer for Cerro Negro's 7.33%, 7.9%, 8.03% bonds

By Angela McDaniels

Tacoma, Wash., Dec. 27 - Petroleos de Venezuela, SA (PDVSA) determined what it will pay for notes tendered under its offer to purchase Cerro Negro Finance, Ltd.'s $82 million 7.33% bonds due 2009, $350 million 7.9% bonds due 2020 and $50 million 8.03% bonds due 2028.

For each $1,000 principal amount of bonds, holders will receive $1,019.19 for the 7.33% bonds, $1,080.00 for the 7.9% bonds and $1,124.95 for the 8.03% bonds, according to a company news release.

The payouts were determined on Dec. 26 and equal par plus accrued interest and an amount equal to 33% of the redemption premium as calculated under the bond indentures. The payout date is expected to be Dec. 28.

The payouts were calculated using the yield to maturity of the 4¾% Treasury note due Feb. 28, 2009 and a fixed spread of 30 basis points for the 7.33% bonds; the 4¼% Treasury note due Nov. 15, 2017 and 50 bps for the 7.9% bonds; and the 5% Treasury note due May 15, 2037 and 50 bps for the 8.03% bonds.

As of 5 p.m. ET on Dec. 26, PDVSA had received tenders and consents from holders of $454.5 million, or 96.7%, of the outstanding bonds.

On Dec. 20, PDVSA announced it had received enough consents to waive any defaults or prospective defaults, to eliminate substantially all the restrictive covenants and events of default in the bond indentures and to allow the release of all collateral.

The tender offer began on Nov. 30 and ends at midnight ET on Dec. 27.

The bonds were issued in connection with the Cerro Negro extra-heavy crude oil project in the Orinoco Belt region, according to a previous company news release.

As already reported, the tender offer is being held in connection with a lock-up agreement PDVSA reached with holders of 79% of the bonds. Under the agreement, the holders will tender all their bonds and will not take any action that interferes with the operation of the Cerro Negro project, including the exercise of any rights or remedies.

The tender offer was conditioned on the receipt of tenders for at least 75% of the bonds.

Lazard Freres & Co. LLC (312 407-6674) is the dealer manager and solicitation agent. Global Bondholder Services Corp. (212 430-3774 or 866 470-3700) is the information agent.

PDVSA is Venezuela's state-owned oil company.

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