Vale reports waterfall tender offers oversubscribed by early date

By Mary-Katherine Stinson

Lexington, Ky., June 22 – Brazil’s Vale SA and Vale Overseas Ltd. announced the early results of their June 7 cash tender offers for up to an maximum aggregate principal amount of notes from four series.

The maximum principal amount for the waterfall offers was set at $500 million less the aggregate principal amount tendered and accepted for purchase under the any-and-all offer that was also launched on June 7.

The waterfall offers were oversubscribed as of 5 p.m. ET on June 21, the early tender date. As a result, only tenders from the first two series of notes will be accepted, according to a 6-K filing with the Securities and Exchange Commission.

Holders had tendered the following notes as of the early tender date, with the series listed in acceptance priority order:

• $101,019,000 of the $1,247,178,000 outstanding 6 7/8% guaranteed notes due 2039 issued by Vale Overseas (Cusip: 91911TAK9), all of which were accepted for purchase for a tender consideration to be based on the 3 7/8% U.S. Treasury due May 15, 2043 plus a fixed spread of 235 basis points;

• $132,256,000 of the $1,458,748,000 outstanding 6 7/8% guaranteed notes due 2036 issued by Vale Overseas (Cusip: 91911TAH6), with $123,882,000 accepted for purchase at a proration factor of 93.7% for a tender consideration to be based on the 3 3/8% U.S. Treasury due May 15, 2033 plus a fixed spread of 257 bps;

• $33,872,000 of the $641,337,000 outstanding 8¼% guaranteed notes due 2034 issued by Vale Overseas (Cusip: 91911TAE3), none of which were accepted for purchase. The tender consideration would have been based on the 3 3/8% U.S. Treasury due May 15, 2033 plus a fixed spread of 231 bps; and

• $20.83 million of the $491,245,000 outstanding 5 5/8% notes due 2042 issued by Vale (Cusip: 91912EAA3), none of which accepted for purchase. The tender consideration would have been based on the 3 7/8% U.S. Treasury due May 15, 2043 plus a fixed spread of 188 bps.

All early tenders in the waterfall offer were eligible for an early tender payment of $50 per $1,000 principal amount that is not payable to holders tendering after the early deadline.

Pricing will be determined at 11 a.m. ET on June 22.

Early settlement for the waterfall notes is expected for June 23.

As the offer was oversubscribed, no more tenders of the waterfall notes will be accepted after the early deadline.

The waterfall offers expire at 5 p.m. ET on July 7.

The tender offers are subject to a financing condition, namely the raising of at least $1 billion and enough funds to cover the any-and-all tender offer or an additional $500 million, whichever is greater.

As previously reported, Vale Overseas also offered to purchase any and all of its $745,441,000 outstanding 6¼% guaranteed notes due 2026 (Cusip: 91911TAP8). That offer expired on June 13.

Noteholders had tendered $274,819,000 of the notes, all of which were accepted. Using guaranteed delivery methods, $11,129,000 of additional notes were tendered.

The company paid a consideration of $1,041.55 per $1,000 of notes under the any-and-all offer.

BMO Capital Markets Corp. (212 702-1840, 833 418-0762), Citigroup Global Markets Inc. (212 723-6106, 800 558-3745), J.P. Morgan Securities LLC (212 834-4045, 866 834-4666) and Scotia Capital (USA) Inc. (212 225-5559, 833 498-1660) are the dealer managers.

D.F. King & Co., Inc. (800 591-8263, 212 269-5550, vale@dfking.com) is the information and tender agent for the offer.

Vale is a Rio de Janeiro-based metals and mining company.

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