Colombia's Petrominerales to sell $400 million five-year convertibles

By Rebecca Melvin

New York, May 31 - Petrominerales Ltd. plans to sell $400 million of five-year convertible bonds at par to yield 2.875% to 3.625% with an initial conversion premium of 32.5% to 37.5% above the closing price of its shares on the Toronto Stock Exchange on Thursday, according to a news release.

The new convertibles are expected to be issued June 12.

Petrominerales is also tendering for $150 million to $275 million of its existing 2.625% convertibles due 2016 from offshore holders. The new deal is contingent on holders tendering at least $150 million of the existing bonds. The tender is also contingent on the new offering.

The modified Dutch auction for existing bonds is at a purchase price of 95 to 100 for each 100 par bond. Holders have until Friday to offer to sell their bonds, and preference will be given to holders switching into the new bonds

Petrominerales also plans to repurchase and cancel between 5 million and 7 million common shares at Thursday's closing price of C$13.80 per share. The share buyback will represent 6% of its outstanding common shares.

If all three transactions are completed, the company will receive net proceeds of about $70 million.

Proceeds are aimed at extending the company's debt maturity profile, minimizing dilution and securing inexpensive working capital. In addition, proceeds will be used to fund oil and gas exploration and development in Latin America.

Prior to these transactions, Petrominerales repurchased $28.2 million of existing bonds at 95.05 through private transactions, leaving $521.8 million of existing bonds outstanding before the tender offer.

ABG Sundal Collier Norge ASA is the manager of the offering and the tender offer.

Bogota, Colombia-based Petrominerales is an oil exploration and production company.

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