Ecopetrol S.A. announces partial redemption of U.S.$250 million of its Notes due 2026

Rhea-AI Summary

Ecopetrol S.A. (NYSE: EC) has announced a partial redemption of U.S.$250 million of its 5.375% Notes due 2026. The redemption, scheduled for September 5, 2024, is part of the company's comprehensive debt management strategy. The redemption price will be approximately U.S.$1,014.95 per U.S.$1,000 principal amount, plus accrued and unpaid interest, totaling about U.S.$1,025.25 per U.S.$1,000 principal amount.

This move aligns with Ecopetrol's financial plan and demonstrates its proactive approach to managing refinancing of 2026 maturities. Ecopetrol, Colombia's largest company, is a major integrated energy player in the Americas, with significant operations in hydrocarbon production, transportation, refining, and petrochemicals.

Positive

• Proactive debt management strategy
• Partial redemption of U.S.$250 million Notes due 2026
• Alignment with company's financial plan objectives

Negative

• Potential increase in short-term debt servicing costs due to redemption premium

Financial Analyst

Ecopetrol's decision to redeem $250 million of its 2026 Notes is a strategic move that demonstrates proactive debt management. The company is paying a premium of 1.495% over the principal, which suggests they view this as a favorable time to reduce their debt load. This action could potentially:

• Improve Ecopetrol's debt-to-equity ratio
• Reduce future interest expenses
• Enhance financial flexibility

However, investors should note that the company will be using $256.3 million in cash for this redemption, which could impact short-term liquidity. The remaining $1.25 billion of the 2026 Notes still presents a significant future obligation. Overall, this move signals confidence in Ecopetrol's financial position and may be viewed positively by the market.

Market Research Analyst

This partial redemption aligns with broader trends in the energy sector, where companies are optimizing their capital structures amid volatile oil prices and the energy transition. Ecopetrol's proactive approach to managing its 2026 maturities could be seen as a positive signal to investors, potentially enhancing market confidence. The premium paid for early redemption suggests Ecopetrol sees more value in reducing debt now than waiting until maturity, which may indicate:

• Expectations of higher interest rates in the future
• Strong current cash position
• Strategic preparation for future investments or acquisitions

Investors should monitor how this move impacts Ecopetrol's credit ratings and borrowing costs for future debt issuances, as these factors will be important for long-term financial health.

BOGOTA, Colombia, Aug. 7, 2024 /PRNewswire/ -- Ecopetrol S.A. (BVC: ECOPETROL; NYSE: EC) announces that, as part of its comprehensive debt management strategy, it will redeem U.S.$250 million of its 5.375% Notes due 2026 (the "Notes") (CUSIP: 279158 AL3 / ISIN: US279158AL39). The outstanding balance of the Notes is U.S.$1.5 billion as of the date hereof.

The redemption date of the bonds will take place on September 5, 2024 (the "Redemption Date") at a redemption price equal to, approximately, U.S.$1,014.95 per U.S.$1,000.00 principal amount outstanding (approximately U.S.$253,737,148.23 for U.S.$250,000,000.00 aggregate principal amount of the Notes outstanding), plus accrued and unpaid interest to the Redemption Date equal to U.S.$10.30 per U.S.$1,000 principal amount outstanding (approximately U.S.$2,575,520.83 for U.S.$250,000,000.00 aggregate principal amount of the Notes outstanding), amounting to, approximately, U.S.$1,025.25 per U.S.$1,000 principal amount outstanding (approximately U.S.$256,312,669.06 for U.S.$250,000,000.00 aggregate principal amount of the Notes outstanding), to be finally calculated three business days prior to the Redemption Date.

The redemption is in line with the objectives of the financial plan and confirms Ecopetrol S.A.'s commitment to proactively manage the refinancing of maturities in 2026.

For more information, please refer to the Securities and Exchange Commission's official Securities and Exchange Commission press release at the following link: Ecopetrol - Notice of Redemption to Holders - 2026 Notes.pdf.

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Ecopetrol is the largest company in Colombia and one of the main integrated energy companies in the American continent, with more than 19,000 employees. In Colombia, it is responsible for more than 60% of the hydrocarbon production of most transportation, logistics, and hydrocarbon refining systems, and it holds leading positions in the petrochemicals and gas distribution segments. With the acquisition of 51.4% of ISA's shares, the company participates in energy transmission, the management of real-time systems (XM), and the Barranquilla - Cartagena coastal highway concession. At the international level, Ecopetrol has a stake in strategic basins in the American continent, with Drilling and Exploration operations in the United States (Permian basin and the Gulf of Mexico), Brazil, and, through ISA and its subsidiaries, Ecopetrol holds leading positions in the power transmission business in Brazil, Chile, Peru, and Bolivia, road concessions in Chile, and the telecommunications sector. 

For more information, please contact: 

Head of Capital Markets (a)
Lina María Contreras Mora
Email: investors@ecopetrol.com.co

Head of Corporate Communications 
Marcela Ulloa
Email: marcela.ulloa@ecopetrol.com.co

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SOURCE Ecopetrol S.A.

FAQ

What is the redemption amount and date for Ecopetrol's (EC) 2026 Notes?

Ecopetrol (EC) will redeem U.S.$250 million of its 5.375% Notes due 2026 on September 5, 2024.

What is the redemption price for Ecopetrol's (EC) 2026 Notes?

The redemption price is approximately U.S.$1,014.95 per U.S.$1,000 principal amount, plus accrued and unpaid interest, totaling about U.S.$1,025.25 per U.S.$1,000 principal amount.

Why is Ecopetrol (EC) partially redeeming its 2026 Notes?

Ecopetrol (EC) is redeeming the Notes as part of its comprehensive debt management strategy and to proactively manage the refinancing of maturities in 2026.

What is the outstanding balance of Ecopetrol's (EC) 2026 Notes after the partial redemption?

After the U.S.$250 million partial redemption, the outstanding balance of Ecopetrol's (EC) 2026 Notes will be U.S.$1.25 billion.