Pemex Issues US$1.4bn Repsol-Convertible Bonds

Mexico's state oil company Pemex is issuing up to US$1.4bn in seven-year bonds Tuesday that are exchangeable for its stake in Spanish oil company Repsol YPF, the two companies announced in separate statements.

Pemex has had a stake in Repsol YPF since 1979, and the convertible bonds plan is the latest in a series of measures to monetize the stake, which presently stands at 4.81%, Pemex said.

The bonds, valued at US$1,000 each, carry semiannual interest payments of 4-4.5% and can be exchanged for up to 58.7 million shares of Repsol stock or cash at a 30-35% share premium, Repsol YPF said.

Bond settlement is set for end-January 2004, and Pemex will retain its Repsol YPF voting rights throughout the life of the bonds.

Luxembourg-based RepCon Lux, an orphan company 99% owned by a Dutch charitable trust, is acting as the bond issuer, with Pemex serving as guarantor. Rating agencies Moody's and Standard & Poor's rank Pemex bonds at Baa1 and BBB-respectively. The bonds will be listed on the Luxembourg stock exchange and there will be no bond offering in Spain. Neither will the bonds be registered in the US, meaning that they will not be sold in the US or offered to US citizens, the statements said.

Funding will support company investment programs, including but not limited to projects that fall under the Pidiregas long-term financing plan, a Pemex source told BNamericas.

The US$1.4bn issue would add to US$6.3bn in bonds Pemex has sold on Mexican and international markets this year, news agency Bloomberg reported.

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