Venezuela's PDVSA tenders for Petrozuata's 7.63%, 8.22%, 8.37% bonds

By Jennifer Chiou

New York, Aug. 14 - Petroleos de Venezuela, SA said it began a cash tender offer for any and all of Petrozuata Finance Inc.'s $61.3 million of 7.63% bonds due 2009, $618.9 million of 8.22% bonds due 2017 and $75 million of 8.37% bonds due 2022.

The bonds are linked to the extra-heavy crude oil project in the Orinoco Belt region.

The offer ends at midnight ET on Sept. 12.

PDVSA is also soliciting consents to eliminate substantially all of the restrictive covenants and events of default in the indenture, release all of the collateral securing the bonds, waive any and all prior and existing defaults, prospective defaults and events of default under the indenture, the common security agreement and the other financing documents, adopt certain proposed amendments to the common security agreement, the indenture and the other financing documents, and terminate the common security agreement.

The company said it is seeking tenders from holders of more than 66.67% of all the bonds.

For each $1,000 principal amount, the company said it will determine the payouts using a fixed spread of 30 basis points over the yields, interpolated on a straight-line basis, of the 4.625% Treasury due Nov. 30, 2008 and the 3.375% Treasury due Dec. 15, 2008 for the 7.63% bonds; a fixed spread of 50 bps over the yields of the 4.25% Treasury due Nov. 15, 2013 and 4% Treasury due Feb. 15, 2014 for the 8.22% bonds and a fixed spread of 50 bps over the yields of the 7.25% Treasury due Aug. 15, 2022 and the 7.625% Treasury due Nov. 15, 2022 for the 8.37% bonds.

The company added that the premium is about equal to 33% of the redemption premium that would be payable on each series of bonds if they were to be redeemed.

PDVSA said it is also offering to pay to holders that tender a consent fee in the amount equal to 0.25% of the principal amount of bonds tendered.

The tender offer will be conditioned on the receipt of tenders for at least 75% of the bonds as well as the compliance by certain holders with their obligations under a lock-up agreement with PDVSA. Those holders have indicated that they own or represent the owners of 77.23% of all outstanding bonds.

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

PDVSA is Venezuela's state-owned oil company.

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