Citgo completes tender for 6%, 7 7/8% notes, redemptions

New York, Nov. 15 - Citgo Petroleum Corp. said it completed its tender offer for its $250 million 6% senior notes due 2011 and $150 million 7 7/8% senior notes due 2006 and the redemption of $194.0 million of its other senior notes and private placement notes.

The company also closed on a new $1.85 billion senior secured credit agreement with a syndicate of lenders led by BNP Paribas and J.P. Morgan Securities Inc. as co-lead arrangers. The credit agreement replaced its existing facility which was due to expire in December,

In the tender, Citgo bought $249.6 million or 99.8% of its 6% notes and $135.7 million or 90.5% of its 7 7/8% notes.

As announced on Nov. 8, Citgo paid $1,053.96 per $1,000 principal amount for the 6% notes and $1,015.15 per $1,000 principal amount for the 7 7/8% notes.

Pricing was set at 2 p.m. ET on Nov. 8. Both prices include the consent payment that will only be paid to holders who tendered by the consent deadline of 5 p.m. ET on Oct. 26.

At its previous announcement on Nov. 7, the Houston-based oil refiner extended its tender to 5 p.m. ET on Nov. 10 from midnight ET on Nov. 9, saying the extension was to coincide with the anticipated closing date of its new credit agreement.

As previously reported, by the consent deadline of 5 p.m. ET on Oct. 26, holders had tendered with consents 99.6% of the 6% notes and 90.4% of its 7 7/8% notes, the required consents to amend the notes' indenture.

Citgo announced the offer on Oct. 13 and said that for each $1,000 principal amount of 6% notes, it would pay a price based on 50 basis points over the yield on the 3 1/8% Treasury note due Oct. 15, 2008.

For each $1,000 principal amount of 7 7/8% notes, Citgo was offering a price based on 50 bps over the yield on the 2% Treasury note due May 15, 2006.

The prices include a consent payment of $25.00 per $1,000.

Citgo will also pay accrued interest up to but excluding the payment date.

The consent solicitation is to amend the notes to eliminate substantially all the restrictive covenants, events of default and other related provisions in the indentures.

Citgo plans to redeem any of the 6% notes that remain outstanding after the tender.

J.P. Morgan Securities Inc. is the dealer manager and solicitation agent (call collect 212 834-3424 or 866 834-4666). Global Bondholder Services Corp. is the information agent (call collect 212 430-3774 or 866 470-3700).

The other notes that were redeemed were called under their terms. The redemptions were funded with available cash.

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