Ecopetrol S.A. Announces Pricing of Cash Tender Offer for Any and All of its Outstanding 4.125% Notes due 2025
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Insights
The tender offer by Ecopetrol to purchase its outstanding 4.125% Notes due 2025 represents a strategic financial maneuver that could impact the company's debt structure and interest expense. The offer's timing and the fixed spread of 0 basis points over the reference yield indicates an attempt to capitalize on current market conditions to reduce future interest payments. The Total Consideration of $994.70 per $1,000 principal amount suggests a discount, which could be attractive to bondholders looking to liquidate their holdings before maturity.
From a financial perspective, this transaction could signal to the market that Ecopetrol is proactively managing its debt portfolio. The concurrent offering of new notes, contingent upon the 'Financing Condition', implies refinancing activity that could potentially improve the company's debt maturity profile and lower its cost of capital. Investors and analysts will be closely monitoring the uptake of the tender offer and the pricing of the new notes, as these will affect Ecopetrol's leverage ratios and interest coverage metrics.
The tender offer announcement by Ecopetrol is a significant event for bond market participants and could influence investor sentiment towards the company's securities. The fixed spread, reference yield and Total Consideration are key terms that will be analyzed by market participants to assess the attractiveness of the offer. The fact that the offer is not conditioned on a minimum principal amount being tendered indicates confidence on the part of Ecopetrol that the offer will be well-received.
Additionally, the context of the bond market, particularly for energy sector companies like Ecopetrol, will be scrutinized. Factors such as oil price volatility, geopolitical tensions and shifts in energy policy can all influence the perceived risk and therefore the market's reception of both the tender offer and the concurrent new notes offering. The response from bondholders could also provide insights into the broader market's view on Ecopetrol's creditworthiness and the future outlook of the company.
The legal framework surrounding the tender offer, including the Offer to Purchase and related Notice of Guaranteed Delivery, presents a complex set of conditions that bondholders must navigate. The stipulation that the offer may be withdrawn at any time before the 10th business day after commencement, or after the 60th business day if not consummated, introduces a layer of uncertainty. This could potentially impact the decision-making process of the security holders.
Legal considerations also extend to the conditions Ecopetrol may waive or the potential termination of the offer before the Expiration Time. These clauses provide the company with flexibility but also require careful consideration by bondholders regarding the timing and potential risks associated with tendering their securities. The legal terms and conditions set forth in the Offer to Purchase document are crucial for investors to understand in order to make an informed decision regarding participation in the offer.
BOGOTÁ, Colombia, Jan. 16, 2024 /PRNewswire/ -- Ecopetrol S.A. ("Ecopetrol" or the "Company") (NYSE: EC) announced today the tender offer consideration (the "Total Consideration") payable in connection with the previously announced cash tender offer (the "Offer") by Ecopetrol, which commenced on January 9, 2024, to purchase any and all of its outstanding
The Offer will expire today, January 16, 2024, at 5:00 p.m.,
The following table sets forth the Total Consideration for the Securities. The Fixed Spread over the Reference Yield listed in the table below is based on the bid-side price of the Reference
Title of | CUSIP/ISIN | Outstanding | Reference | Bloomberg | Reference | Fixed | Total | ||||||
|
279158 AK5 |
|
UST |
FIT4 |
4.678 % |
+0 bps |
|
(1) Per | ||||
(2) Excludes accrued and unpaid interest on their purchased Securities from the last interest payment date for |
In addition to the Total Consideration, holders whose Securities are accepted for purchase pursuant to the Offer, including Securities tendered by guaranteed delivery, will also receive accrued and unpaid interest on their purchased Securities from the last interest payment date for the Securities to, but excluding, the Settlement Date.
Upon the terms and subject to the conditions of the Offer, the settlement date is expected to be January 19, 2024 (the "Settlement Date"). On the Settlement Date, Ecopetrol expects to accept for payment and pay the Total Consideration for Securities validly tendered and not validly withdrawn at or prior to the Expiration Time or delivered by guaranteed delivery prior to 5:00 p.m.,
Tenders of Securities pursuant to the Offer may be validly withdrawn at or prior to the Expiration Time. If the Offer is extended, tendered Securities may be withdrawn at any time before the 10th business day after commencement of the Offer. Securities subject to the Offer may also be validly withdrawn at any time after the 60th business day after commencement of the Offer if for any reason the Offer has not been consummated within 60 business days after commencement.
The Offer is conditioned upon the satisfaction or waiver by Ecopetrol of certain conditions described in the Offer to Purchase, including the Financing Condition (as defined below), but is not conditioned upon any minimum principal amount of Securities being tendered. Subject to applicable law, Ecopetrol may, at its sole discretion, waive any condition applicable to the Offer and may extend the Offer. Under certain conditions and as more fully described in the Offer to Purchase, Ecopetrol may terminate the Offer before the Expiration Time.
The Offer is being made in connection with a concurrent offering of notes (the "New Notes") by the Company (the "Notes Offering"). The "Financing Condition" means that the Company shall have priced and closed the Notes Offering on terms satisfactory to the Company and resulting in net cash proceeds sufficient to fund the Total Consideration with respect to the Securities validly tendered at or prior to the Expiration Time (regardless of actual amount of Securities tendered), plus accrued and unpaid interest on the purchased Securities from the last interest payment date to, but excluding, the Settlement Date. The Offer is not an offer to sell or a solicitation of an offer to buy the New Notes.
The complete terms and conditions of the Offer are set forth in the Offer to Purchase and in the related Notice of Guaranteed Delivery, which holders are urged to read carefully before making any decision with respect to the Offer.
The Offer is open to all registered holders of Securities. A beneficial owner of Securities that are held of record by a broker, dealer, commercial bank, trust company, or other nominee (each, a "Custodian") must instruct such Custodian to tender such Securities on the beneficial owner's behalf in a timely manner. Beneficial owners should be aware that a Custodian may establish its own earlier deadline for participation in an Offer.
Global Bondholder Services Corporation is serving as the tender agent and information agent. Requests for documents may be directed to Global Bondholder Services Corporation by telephone at +1 212-430 3774 (banks and brokers) or Toll-Free at +1 855-654-2014.
Copies of the Offer to Purchase and related Notice of Guaranteed Delivery are available at the following web address: at https://gbsc-usa.com/ecopetrol/.
BBVA Securities Inc., BofA Securities, Inc. and Citigroup Global Markets, Inc. are serving as Dealer Managers (the "Dealer Managers") for the Offer. Questions regarding the Offer may also be directed to the Dealer Managers as set forth below:
BBVA Securities Inc. 1345 Avenue of the 44th Floor Attn: Liability Management Collect: +1 (212) 728 2446 | BofA Securities, Inc. One Bryant Park Attention: Liability Management Group Collect: +1 (646) 855-8998
| Citigroup Global Markets, Inc. 388 Greenwich Street, Trading 4th Attn: Liability Management Group Collect: +1 (212) 723-6106 |
This press release is for informational purposes only and does not constitute an offer to purchase nor the solicitation of an offer to sell any Securities. The Offer is being made only pursuant to the Offer to Purchase and related Notice of Guaranteed Delivery.
No Recommendation
None of Ecopetrol, BBVA Securities Inc., BofA Securities, Inc., Citigroup Global Markets, Inc., Global Bondholder Services Corporation, or the trustee or security registrar with respect to the Securities, nor any affiliate of any of the foregoing, has made any recommendation as to whether holders should tender or refrain from tendering all or any portion of their Securities in response to the Offer or expressing any opinion as to whether the terms of the Offer are fair to any holder. Holders must make their own decision as to whether to tender any of their Securities and, if so, the purchase price of Securities to tender. Please refer to the Offer to Purchase for a description of the offer terms, conditions, disclaimers and other information applicable to the Offer.
About Ecopetrol
Ecopetrol is the largest company in
Disclaimer and Other Important Notices
The Company expressly reserves the absolute right, in its sole discretion, from time to time to purchase any Securities that remain outstanding after the Expiration Time through open-market or privately negotiated transactions, one or more additional tender or exchange offers or otherwise, on terms and at prices that may or may not be equal to the consideration offered in the Offer, or to exercise any of its rights, including redemption rights, under the Indenture governing the Securities.
This press release and the Offer to Purchase do not constitute an offer to purchase or the solicitation of an offer to sell Securities in any jurisdiction in which such offer or solicitation would be unlawful. In those jurisdictions where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of Ecopetrol by the Dealer Managers or one or more registered brokers or dealers licensed under the laws of such jurisdiction. If materials relating to the Offer come into a holder's possession, the holder is required by Ecopetrol to inform itself of and to observe all of these restrictions.
The Offer to Purchase has not been filed with or reviewed by the SEC, any state securities commission or any other regulatory authority, nor has any such commission or other regulatory authority passed upon the accuracy or adequacy of the Offer to Purchase or any of the accompanying ancillary documents delivered thereunder. Any representation to the contrary is unlawful and may be a criminal offense.
The Offer to Purchase will not be authorized by the Colombian Superintendency of Finance (Superintendencia Financiera de
This press release may contain forward-looking statements within the meaning of Section 27A of the United States Securities Act of 1933, as amended, and Section 21E of the United States Securities Exchange Act of 1934, as amended, including those related to the Offer. Forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future, and, accordingly, such results may differ from those expressed in any forward-looking statements. Ecopetrol is not under any obligation to (and expressly disclaims any such obligation to) update forward- looking statements as a result of new information, future events or otherwise, except as required by law.
Investor Relations
Carolina Tovar Aragón
Head of Capital Markets
Carrera 13 No. 36-24, Bogotá,
e-mail: investors@ecopetrol.com.co
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SOURCE Ecopetrol S.A.
FAQ
What is the Total Consideration for Ecopetrol's outstanding 4.125% Notes due 2025?
When will the settlement date for the tender offer be?
What are the conditions for the Offer?
What is the concurrent offering related to the tender offer?
Who is serving as the tender agent and information agent for the Offer?
