Valero gives early tenders results, pricing, modifies acceptance levels

By William Gullotti

Buffalo, N.Y., Feb. 16 – Valero Energy Corp. announced the pricing terms for its four-series cash tender offer, according to a press release on Wednesday.

In an earlier release on Wednesday, Valero announced the early results of the tender offer and modified some of the terms including an increase in the subcap on the first two series and a change to the aggregate purchase amount to accept all of the notes tendered from the fourth series.

The subcap on the first two series has been lifted to $579,319,000 from $500 million.

The company is lifting the aggregate purchase price from $1 billion to accept all of the tendered notes from the fourth series, the 3.4% senior notes due 2026.

The tender offer originally had seven notes; however, notes will only be accepted from the first four series under the waterfall tender offer.

Accordingly, Valero is expecting to accept the following amounts of notes from the tenders for these series:

• All of the $72,184,000 tendered of the $324,259,000 outstanding 3.65% senior notes due 2025 (Cusip: 91913YAS9) at $1,037.70 per $1,000 principal amount, with pricing based on the 1.125% U.S. Treasury due Jan. 15, 2025 plus 60 basis points; and

• $507,135,000 accepted of the $671,754,000 tendered of the $1.05 billion outstanding 2.85% senior notes due 2025 (Cusip: 91913YAY6) at $1,014.10 per $1,000 principal amount, with pricing also based on the 1.125% U.S. Treasury due Jan. 15, 2025 plus 60 bps (this series will be prorated);

• All of the $168,092,000 tendered of the $375,764,000 outstanding 4.375% senior notes due 2026 issued by Valero Energy Partners LP (Cusip: 91914JAA0) at $1,077.62 per $1,000 principal amount, with pricing based on the 1.5% U.S. Treasury due Jan. 31, 2027 plus 65 bps; and

• All of the $652,589,000 tendered of the $1.25 billion outstanding 3.4% senior notes due 2026 (Cusip: 91913YAU4) at $1,038.09 per $1,000 principal amount, with pricing based on the 1.5% U.S. Treasury due Jan. 31, 2027 plus 55 bps.

Pricing took place at 10 a.m. ET on Feb. 16.

The total considerations include an early tender premium of $30 per $1,000 note that will be paid to noteholders who tendered by the early deadline, 5 p.m. ET on Feb. 15.

The three notes that were originally part of the offer, but will have no notes accepted, are the following:

• $600 million 2.15% senior notes due 2027 (Cusip: 91913YBB5) with pricing based on the 1.5% U.S. Treasury due Jan. 31, 2027 plus 70 bps;

• $750 million 4.35% senior notes due 2028 (Cusip: 91913YAV2) with pricing based on the 4.35% U.S. Treasury due Jan. 31, 2027 plus 115 bps; and

• $500 million 4.5% senior notes due 2028 issued by Valero Energy Partners (Cusip: 91914JAB8) with pricing based on the 1.5% U.S. Treasury due Jan. 31, 2027 plus 115 bps.

Early settlement is expected for Feb. 17.

The tender offer was going to expire at midnight ET on March 2. However, the offer is oversubscribed, and the company does not expect to accept any of the notes tendered after the early deadline.

Final settlement would have been March 4.

The tender offer is subject to a financing condition. Valero priced $650 million of notes on Feb. 2 to help fund the tender offer.

SMBC Nikko Securities America, Inc. (888 284-9760, 212 224-5328), J.P. Morgan Securities LLC (866 834-4666, 212 834-3424) and Mizuho Securities USA LLC (866 271-7403, 212 205-7736) are lead dealer managers, and Citigroup Global Markets Inc. and MUFG Securities Americas Inc. are co-dealer managers.

D.F. King & Co., Inc. (800 334-0384, 212 269-5550, vlo@dfking.com) is the information and tender agent for the offer.

San Antonio-based Valero is an oil refinery owner and operator.

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