This transaction is intended to allow Petrobras and PIFCo to reduce overall indebtedness and take advantage of their strong cash flow generation. In addition, because Petrobras and PIFCo received an investment-grade rating in October 2005 by Moody's Investor Service, they expect to have an ability to raise funds on more favorable terms than were available at the time PIFCo issued the original notes.
Information pertaining to the repurchase:
PIFCo has commenced the cash tender offers for any and all of the aggregate principal amount outstanding of the five series of notes described in the table below, subject to the conditions and limitations described in the offer to purchase dated July 18, 2006, including the condition that PIFCo shall not have received tenders of notes in all offers having an aggregate principal amount in excess of U.S.$1 billion (the "Maximum Tender Condition"), excluding certain notes currently held by PIFCo or its affiliates that it intends to tender, or cause to be tendered, in the offers. In the event that the Maximum Tender Condition is not met, PIFCo may terminate one or more offers in order to cause this condition to be satisfied, beginning with the offer for the notes bearing the longest maturity and continuing in decreasing order of maturity.
Title of CUSIP/ISIN Maturity Fixed Reference Bloomberg Security Number Date Spread Treasury Reference (Basis Security Page Points) PIFCo 12.375% 71645WAF8 / April 1, 4.625% U.S. BBT4 Global Step- US71645WAF86 2008 Treasury Up Notes due +35 Note due 2008 ("Step- March 31, Up Notes") 2008 PIFCo 9.875% EC3844981 / May 9, 2.625% BBT4 Senior Notes USG7028BAA91*; 2008 U.S. due 2008 71646FAA5 / +35 Treasury ("2008 US71646FAA57; Note due Notes") 71646FAB3 / May 15, US71646FAB31* 2008 PIFCo 9.750% 71645WAB7 / July 6, 5.125% BBT6 Senior Notes US71645WAB72*; 2011 U.S. due 2011 EC4142831 / +70 Treasury ("2011 USG7028BAB74*; Note due Notes") 71645WAA9 / June 30, US71645WAA99 2011 PIFCo 9.125% 71645WAG6 / July 2, 4.250% BBT6 Global Notes US71645WAG69 2013 U.S. due 2013 +125 Treasury ("2013 Note due Notes") August 15, 2013 PIFCo 8.375% 71645WAH4 / December +190 5.125% BBT6 Global Notes US71645WAH43 10, 2018 U.S. due 2018 Treasury ("2018 Note due Notes") May 15, 2016 * These Notes are admitted to trading on the regulated market of the Luxembourg Stock Exchange.
The purchase price for each $1,000 principal amount of notes validly tendered and not validly withdrawn pursuant to an offer shall be the price (calculated as described in the offer to purchase) equal to the present value on the settlement date of such principal amount and the present value of the interest payments due on such principal amount from the last interest payment date through the applicable maturity date indicated in the chart above, determined on the basis of a yield to the applicable maturity date equal to the sum of (x) the bid-side yield of the applicable reference treasury security indicated in the chart above and calculated as described below, plus (y) the applicable fixed spread indicated in the chart above, minus accrued and unpaid interest from the last interest payment date to, but excluding, the settlement date, payable on the settlement date. In addition, registered holders of notes who validly tender and do not validly withdraw their notes in an offer will also receive accrued and unpaid interest from the last interest payment date with respect to the relevant series to, but excluding, the settlement date, payment on the settlement date.
The reference yield for the applicable reference treasury security will be calculated by Morgan Stanley & Co., Incorporated and UBS Securities LLC, who PIFCo has retained as dealer managers for the offers, in accordance with standard market practice as of 4:00 pm New York City time, on July 20, 2006, as reported on the applicable Bloomberg Government Pricing Monitor page indicated in the chart above, or, if any relevant price is not available on a timely basis on the applicable Bloomberg Page or is manifestly erroneous, such other recognized quotation source as the dealer managers shall select in their sole discretion.
The offers are scheduled to expire at 5:00 pm, New York City time, on Monday, July 24, 2006, unless extended or earlier terminated. Settlement of each offer is expected to occur three business days after the applicable expiration time of that offer.
PIFCo has retained The Bank of New York as depositary for the offers, The Bank of New York (Luxembourg) S.A. to serve as Luxembourg agent for the offers and D.F. King & Co., Inc. as information agent for the offers.
Requests for documents may be directed to D.F. King & Co., Inc. by telephone at (212) 269-5550 for banks and brokers or at (800) 859-8508 for all others, or in writing at 48 Wall Street, 22nd Floor, New York, New York 10005. These documents contain important information, and holders should read them carefully before making any investment decision. Questions regarding the offers may be directed to Morgan Stanley & Co., Incorporated at (800) 624-1800 (in the United States) or (212) 761-1864 (outside the United States) and UBS Securities LLC at (888) 722-9555, ext. 4210 (in the United States) or (203) 719-4210 (outside the United States).
This announcement does not constitute an offer to purchase or a solicitation of an offer to sell securities. The offers are being made solely by the offer to purchase and related letter of transmittal. The offers shall not be made in any such jurisdiction in which it is not permitted to be made under applicable law.
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