AES increases, extends tender offer for nine series of notes

The AES Corp. said Thursday (May 1) that it had extended its previously announced offer to buy a portion of its outstanding senior and senior subordinated debt at a discount from its par value, and had raised the amount of five of the nine series of notes that it is offering to buy.

AES said that the offer for five series of senior notes was extended to 8 a.m. ET on May 15, while the deadline for four series of senior subordinated notes was extended to 5 p.m. ET on May 7, with both deadlines subject to possible further extension. The previous deadline for both classes of notes was 5 p.m. ET on May 6.

AES, which is funding the tender offer for the notes using a portion of the proceeds from its sale of new bonds, announced that it had priced a total of $1.8 billion of the new notes, up from the originally announced deal size. It said it planned to use $1.075 billion of the proceeds to purchase the existing notes (based on the notes tendered as of 5:00 p.m. ET on May 1), with $475 million to be used to repay a portion of its senior secured credit facility debt and the remainder to be used for general corporate purposes. Previously it had planned to buy $525 million of the notes.

AES raised the aggregate principal amount of its 8% Series A senior notes due 2008 that it will purchase to $43.797 million from the originally announced $20 million. As of 5 p.m. ET on May 1, $53.982 million of the notes had been tendered, out of the $199.022 million currently outstanding.

It raised the amount of its 8¾% Series G senior notes due 2008 that it will purchase to $161.398 million from the originally announced $40 million. As of May 1, $198.931 million of the notes had been tendered, out of the $400 million currently outstanding.

It raised the amount of its 9½% Series B senior notes due 2009 that it will purchase to $252.951 million from the originally announced $75 million. As of May 1, $311.774 million of the notes had been tendered, out of the $750 million currently outstanding.

It raised the amount of its 9 3/8% Series C senior notes due 2010 that it will purchase to $414.345 million from the originally announced $86 million. As of May 1, $510.699 million of the notes had been tendered, out of the $850 million currently outstanding.

It raised the amount of its 8 7/8% Series E senior notes due 2011 that it will purchase to $223.504 million from the originally announced $54 million. As of May 1, $275.479 million of the notes had been tendered, out of the $536.69 million currently outstanding.

AES did not raise the aggregate principal amounts of the four series of senior subordinated notes for which it is tendering, leaving them instead at previously announced levels.

It said that as of May 1, $18.915 million of its 10 ¼% senior subordinated notes due 2006 had been tendered, out of the $217.05 million currently outstanding (AES is tendering for up to $55 million principal amount of the notes).

As of May 1, $40.116 million of its 8 3/8% senior subordinated notes due 2007 had been tendered, out of the $303.290 million currently outstanding (AES is tendering for up to $77 million principal amount of the notes).

As of May 1, $27.138 million of its 8½% senior subordinated notes due 2007 had been tendered, out of the $338.25 million currently outstanding (AES is tendering for up to $86 million principal amount of the notes).

And as of May 1, $4.952 million of its 8 7/8% senior subordinated notes due 2027 had been tendered, out of the $125 million currently outstanding (AES is tendering for up to $32 million principal amount of the notes).

All other previously announced terms of the tender offer remain unchanged.

Citigroup - formerly Salomon Smith Barney - (call the Liability Management Group at 1-800 558-3745) and UBS Warburg LLC (call the Liability Management Group at 1-888-722-9555, ext. 8035) are the joint dealer managers for the tender offer. Wells Fargo Bank Minnesota, N.A. (call 1-800-344-5128) is the depositary and information agent in connection with the tender offer.

AS PREVIOUSLY ANNOUNCED: AES, an Arlington, Va.-based independent power producer, said on April 4 that it planned to launch a refinancing transaction that would include the private placement under Rule 144A of an estimated $1 billion offering of new second-priority senior secured notes (this was subsequently increased), which would fund a cash tender offer to acquire a total of $525 million face amount of its outstanding senior and subordinated notes (this also was subsequently increased). The proceeds would also fund an amendment and partial paydown of $475 million of outstanding borrowings under its senior bank facility.

AES initially said that the tender offer would expire at 5 p.m. ET on May 2, (this was subsequently extended), and set an early tender deadline of 5 p.m. ET on April 21 (this was extended for several series of notes, but not for the remainder). It said that holders tendering by the latter early tender deadline would be entitled to an early tender premium of $20 per $1,000 principal amount of notes tendered as part of their total consideration; holders tendering after the early tender deadline would receive only the tender offer consideration (i.e., total consideration minus the early tender premium). It further said that tenders of notes could not be withdrawn after the early tender deadline, except under limited circumstances. The company further said that all tendering holders would also receive unpaid and accrued interest on their notes up to, but not including the settlement date.

AES set total consideration it is offering for its 8% senior notes due 2008 at $850 per $1,000 principal amount of notes tendered, including the $20 early tender premium.

It set total consideration it is offering for its 8 ¾% senior notes due 2008 at $910 per $1,000 principal amount of notes tendered, including the $20 early tender premium.

It set total consideration it is offering for its 9 ½% senior notes due 2009 at $920 per $1,000 principal amount of notes tendered, including the $20 early tender premium.

It set total consideration it is offering for its 9 3/8% senior notes due 2010 at $920 per $1,000 principal amount of notes tendered, including the $20 early tender premium.

It set total consideration it is offering for its 8 7/8% senior notes due 2011 at $890 per $1,000 principal amount of notes tendered, including the $20 early tender premium.

It initially set total consideration it is offering for its 10 ¼% senior subordinated notes due 2006 at $880 per $1,000 principal amount of notes tendered, including the $20 early tender premium, although this was subsequently raised to $930 per $1,000 principal amount.

It initially set total consideration it is offering for its 8 3/8% senior subordinated notes due 2007 at $810 per $1,000 principal amount of notes tendered, including the $20 early tender premium, although this was subsequently raised to $850 per $1,000 principal amount.

It initially set total consideration it is offering for its 8½% senior subordinated notes due 2007 at $810 per $1,000 principal amount of notes tendered, including the $20 early tender premium, although this was subsequently raised to $850 per $1,000 principal amount.

And It set total consideration it is offering for its 8 7/8% senior subordinated notes due 2006 at $670 per $1,000 principal amount of notes tendered, including the $20 early tender premium, and left this price unchanged.

AES said it might increase the principal amount of notes that it is seeking to purchase (it subsequently did so), depending on the amount of proceeds that it receives from the proposed private placement, provided that the aggregate principal amount of the notes purchased will not exceed $1.3 billion.

The company said that its obligation to accept notes tendered and pay the tender offer consideration and any early tender premium would be subject to a number of conditions set forth in the official Offer to Purchase and Letter of Transmittal for the tender offer, including the completion of the proposed private placement of new notes and the effectiveness of an amendment to AES' senior credit facility (AES said that in conjunction with the refinancing transaction, it is also seeking an amendment to certain provisions of its senior secured credit facility to permit the proposed private placement and the tender offer, and to make certain other changes. In connection with the refinancing and the amendment, and subject to consummation of the proposed private placement of new notes, AES will repay $475 million of borrowings under the senior secured credit facility).

On April 22, AES raised the consideration it is offering to the holders of three out of the four series of senior subordinated notes, as already indicated. It also extended the early tender deadline for those notes to 5 p.m. ET on April 25 from the originally announced April 21, but did not indicate any similar extension for the other senior subordinated note series, or for the five series of senior notes being tendered for.

AES also extended the overall tender offer deadline to 5 p.m. ET on May 5, subject to possible further extension, from the previous deadline at 5 p.m. ET on May 2. All other original tender offer terms - including the consideration being offered to the holders of the remaining six series of senior and senior subordinated notes - remained unchanged.

On April 24, AES said that its tender offer for five of the note series of notes it was tendering for was oversubscribed-by nearly six times in one case. Oversubscription took place for each of the series of senior notes, but for none of the four series of senior subordinated notes for which AES is tendering.

It said that in total, the company had so far received $1.42 billion of tenders, versus the $525 million it was (then) seeking to buy. However, AES reiterated that it might increase the size of the tender offer up to a maximum of $1.3 billion principal amount, depending on the size of the offering of new notes it was bringing to market.

AES also officially announced the launch of the then-$1 billion note offering, which was subsequently substantially upsized.

On April 28, said it would waive the early tender deadline for three of the nine series of notes for which it is tendering - the 10¼% senior subordinated notes due 2006, 8 3/8% senior subordinated notes due 2007 and 8 ½% senior subordinated notes due 2007. It said that holders tendering those securities by what was then the expiration deadline (5 p.m. ET on May 6, which was subsequently extended) will receive the early tender premium as part of their total consideration.

Magnum Hunter to redeem $50 million 10% '07 notes

Magnum Hunter Resources Inc. said on Friday (May 2) that it has elected to redeem $50 million in aggregate principal amount of its $110 million of outstanding 10% senior notes due 2007.

The Irving, Tex.-based independent energy exploration and development company said that the notes would be redeemed at 5 p.m. ET on June 2, and that holders would be paid 103.333% of the face amount of their redeemed notes (i.e., $1,033.33 per $1,000 principal amount of notes), plus accrued and unpaid interest up to the redemption date.

The company's total expenditure will be $51,666,500 for the face value of the notes plus the call premium, plus $13,888.89 in aggregate unpaid and accrued interest.

Magnum Hunter said that the notes to be redeemed will be chosen by lot. The company was mailing out to all holders of notes to be redeemed the notice required under the Indenture.

It noted that approximately $8.2 million of the $110 million of outstanding 10% notes are currently owned by a wholly-owned unrestricted subsidiary of Magnum Hunter, and are subject to being redeemed by lot.

This $50 million note redemption follows a $30 million redemption completed in January.

Magnum Hunter concurrently announced that its commercial bank lenders had approved certain amendments to its senior bank credit facility, including an increase in the borrowing base from $250 million to $300 million and an extension of the maturity date by over one year to May 2006. It said that the amendment "gives Magnum Hunter the ability to continue on its game plan to further improve our balance sheet by replacing 10% money with a significantly lower cost of funds with our commercial banks."

The company said that such a configuration of its balance sheet would result in interest savings of approximately $1.75 million in 2003, and $3 million annually.

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