Uruguay sets issue prices for new bonds in connection with exchange offer

By Angela McDaniels

Seattle, Oct. 26 - The Republic of Uruguay announced the issue price for the new bonds to be issued in the tender and exchange offer it began on Oct. 19 for 20 series of bonds totaling $2.2 billion.

The issue price for the new 8% bonds due 2022 is 106.75% of par, and the issue price for the new 7 5/8% bonds due 2036 is 100.75% of par.

Eighteen series of bonds are eligible to be exchanged for the new bonds or to be tendered for cash. The country's 7% eurobonds due 2019 may not be exchanged for the new 8% bonds, and the country's 7 7/8% dollar-denominated bonds due 2027 are only eligible to be exchanged for the new 7 5/8% bonds.

Noteholders may submit each series of the bonds for exchange or tender through a modified Dutch auction for each series of bonds. The minimum clearing price for each series is set out in the table below.

Holders who tender will receive an amount in cash equal to the clearing price plus accrued interest up to but excluding the settlement date.

The maximum amount Uruguay will pay for its tender offer is $400 million.

Tenders of $100,000 or €100,000 or less will receive first priority, and tenders of $100,000 or €100,000 or more will receive second priority. All bonds tendered will be subject to proration.

Uruguay said it will issue up to $600 million of the new 8% bonds and 7 5/8% bonds pro rata in connection with the exchange offer. Noteholders who exchange but do not receive bonds will instead receive an amount in cash equal to the clearing price plus accrued interest, divided by the sum of the new bond issue price plus related accrued interest.

The offer will end at 4:30 p.m. ET on Oct. 27. The settlement date is expected to be Nov. 14.

The indentures governing the new bonds contain a new provision that requires Uruguay to receive consent from holders of a supermajority of the principal amount of outstanding bonds in order to make certain amendments to the indentures, including modification of the bonds' maturity, interest rate or redemption price.

More specifically, if Uruguay plans to amend one series of bonds, it must receive consents from holders of 75% of the principal amount outstanding of that series of bonds. If Uruguay plans to amend multiple series of bonds, it must receive consents from holders of 85% of the principal amount outstanding of all affected bonds and from holders of two thirds of the principal amount outstanding of each series of affected bonds.

Citigroup (800 558-3745 or 212 723-6108), Morgan Stanley & Co., Inc. (800 624-1808 or 212 761-1864) and UBS Investment Bank (888 722-9555 ext. 4210 or 203 719-4210) are the joint dealer managers for the offer. D.F. King & Co., Inc. (212 269-5550 for banks and brokers, otherwise 800 859-8511 or 44 20 7920 9700) is the information agent.

The country will use a portion of the proceeds from the Ps. 7.081 billion of 5% bonds due 2018 and $500 million of 7 5/8% bonds due 2036 it sold on Oct. 19 to fund the tender offer.

Uruguay said it has applied to list the new bonds on the London Stock Exchange.

Table: Uruguay bonds eligible for exchange or tender

Bond Minimum clearing price

Eurobonds

7% bonds due 2011 107.75

7% bonds due 2012 107.25

7% bonds due 2019 107.75

Dollar-denominated bonds

7% bonds due 2008 103.35

7 7/8% bonds due 2008 105.55

7 7/8% bonds due 2009 106.05

7¼% bonds due 2009 104.70

Floating-rate bonds due 2009 102.30

Floating-rate bonds due 2010 101.80

8¾% bonds due 2010 110.25

7¼% bonds due 2011 106.25

8 3/8% bonds due 2011 110.80

7 5/8% bonds due 2012 107.80

7% bonds due 2013 105.10

7 7/8% bonds due 2014 110.05

7¼% bonds due 2014 106.35

7½% bonds due 2015 108.25

8¾% bonds due 2015 115.85

7 5/8% bonds due 2017 107.55

7 7/8% bonds due 2027 108.30

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