(CFE, 19.May.2022) — Comisión Federal de Electricidad (CFE), a productive state enterprise of the Federal Government of the United Mexican States announced today that it commenced a tender offer (the “Offer“) to purchase for cash its 4.875% Notes due 2024 (the “2024 Notes“), 6.125% Notes due 2045 (the “2045 Notes“), 5.750% Notes due 2042 (the “2042 Notes“), 4.677% Notes due 2051 (the “2051 Notes“), 4.750% Notes due 2027 (the “2027 Notes“) and 3.348% Notes due 2031 (the “2031 Notes” and, together with the 2024 Notes, the 2045 Notes, the 2042 Notes, the 2051 Notes, the 2027 Notes, the “Notes“) for an aggregate purchase price, excluding accrued and unpaid interest (“Aggregate Purchase Price“), of up to US$1,000,000,000 (the “Maximum Consideration“), upon the terms and subject to the conditions set forth in the offer to purchase dated May 19, 2022 (as it may be amended or supplemented from time to time, the “Offer to Purchase“) and subject to (1) the maximum per series consideration for the 2024 Notes set forth in the table below (the “2024 Maximum Per Series Consideration“), (2) the acceptance priority level of each series of Notes (the “Acceptance Priority Level“) and (3) possible proration, each as described herein and in the Offer to Purchase.
The following table sets forth certain information relating to the Offer:
Early Tender Consideration and Late Tender Consideration
Holders who validly tender their Notes on or prior to 5:00 p.m. (New York City time) on June 2, 2022 (the “Early Tender Date“) and do not validly withdraw their Notes on or prior to 5:00 p.m. (New York City time) on June 2, 2022 (the “Withdrawal Date“) will be eligible to receive the applicable Early Tender Consideration. The applicable Early Tender Consideration includes the applicable Early Tender Premium. Accrued Interest will be payable, in cash, in addition to the Early Tender Consideration.
Holders who validly tender their Notes after the Early Tender Date but on or prior to 11:59 p.m on June 16, 2022 (the “Expiration Date“) will be eligible to receive the applicable Late Tender Consideration, which will be equal to the applicable Early Tender Consideration minus the applicable Early Tender Premium. Accrued Interest will be payable, in cash, in addition to the Late Tender Consideration.
CFE has agreed, subject to specified exceptions and limitations, to pay additional interest to participants in the Offer to cover Mexican withholding taxes on interest payments (including gains treated as interest with respect to the sale of the Notes tendered in the Offer and the applicable Accrued Interest), such that the amount received by such holders after deduction of the withholding tax on interest payments (including gains treated as interest with respect to the sale of the Notes tendered in the Offer and the applicable Accrued Interest) will equal the Early Tender Consideration or Late Tender Consideration, as applicable, and the Accrued Interest.
Determination of Consideration
The Early Tender Consideration payable by CFE for each US$1,000 principal amount of each series of Notes validly tendered at or prior to the Early Tender Date and accepted by us pursuant to the Offer will be calculated in accordance with standard market practice, as described in the Offer to Purchase, using the applicable yield to maturity (the “Offer Yield“), which will be equal to the sum of:
- the yield (the “Reference Yield“), as calculated by the Dealer Managers (as defined below), that equates to the bid-side price of the applicable Reference U.S. Treasury Security specified on the table above for such series of Notes at the Price Determination Date quoted on the Bloomberg reference page “FIT1” (or any other recognized quotation source selected by the Dealer Managers in their sole discretion if such quotation report is not available or is manifestly erroneous), plus
- the applicable Fixed Spread specified on the table above for such series of Notes.
Accordingly, the applicable Early Tender Consideration (which includes the applicable Early Tender Premium) payable by us for each US$1,000 principal amount of each series of Notes accepted by us will equal:
- the present value on the Early Settlement Date or, if there is no Early Settlement Date with respect to such series of Notes, the applicable Final Settlement Date, as determined at the Price Determination Date, of US$1,000 principal amount of such series of Notes due on the maturity date of such Notes and all scheduled interest payments on such principal amount of Notes to be made from (but excluding) the applicable Settlement Date, up to and including such maturity date, discounted to the applicable Settlement Date in accordance with standard market practice as described by the formula set forth in Annex A to the Offer to Purchase, at a discount rate equal to the applicable Offer Yield, minus
- the applicable Accrued Interest per US$1,000 principal amount of such Notes;
such price being rounded to the nearest cent per US$1,000 principal amount of such Notes.
The Late Tender Consideration payable by us for each US$1,000 principal amount of each series of Notes validly tendered and accepted by us, will be equal to the applicable Early Tender Consideration for such series of Notes minus the Early Tender Premium for such series of Notes.
Promptly after the Price Determination Date, CFE will issue a press release specifying the Offer Yield and Early Tender Consideration for each series of Notes.
Early Settlement and Final Settlement
Following the Early Tender Date and prior to the Expiration Date, CFE may, but is not required to, accept the Notes validly tendered at or prior to the Early Tender Date (the “Early Settlement Right“), provided that all conditions set forth in the Offer to Purchase have been satisfied or waived by CFE (the date of such acceptance, the “Early Acceptance Date“). Notes accepted on an Early Acceptance Date, if any, will be settled promptly thereafter, currently expected to be on or about the third business day following the Early Tender Date (the “Early Settlement Date“). The “Final Settlement Date” is the date that CFE settles all Notes not previously settled on the Early Settlement Date, if any, and CFE expects such date to be promptly following the Expiration Date, but in any case on or prior to the second business day following the Expiration Date (any references to “Settlement Date” are to each of the Early Settlement Date and the Final Settlement Date as context may require).
Subject to applicable law, the Offer may be amended, extended or terminated. If CFE determines, in its sole discretion, to extend the Offer beyond the Expiration Date, there will be a new Final Settlement Date. During any extension of the Offer, all Notes previously tendered and not accepted for purchase pursuant to the Offer will remain subject to the Offer and may, subject to the terms and conditions of the Offer, be accepted for purchase by us. No extension of either the Early Tender Date or the Expiration Date will require the extension of withdrawal rights, unless required by applicable law.
Maximum Consideration; 2024 Maximum Per Series Consideration; Acceptance Priority Procedures
Subject to the terms and conditions set forth in the Offer to Purchase CFE, is offering to purchase its outstanding Notes for cash for an Aggregate Purchase Price up to the Maximum Consideration. Subject to the Maximum Consideration and the other conditions set forth in the Offer to Purchase, CFE will acquire validly tendered 2024 Notes up to the 2024 Maximum Per Series Consideration.
CFE expressly reserves its right, but is not required, to increase the Maximum Consideration or the 2024 Maximum Per Series Consideration in its sole discretion, without extending the Withdrawal Date, the Early Tender Date, the Expiration Date or any Settlement Date or otherwise reinstating withdrawal rights.
Subject to the satisfaction or waiver of the conditions of the Offer, the Notes will be purchased in accordance with their Acceptance Priority Level pursuant to the following acceptance priority procedures:
- first, if the Aggregate Purchase Price of all Notes validly tendered at or prior to the Early Tender Date by holders does not exceed the Maximum Consideration and the 2024 Series Purchase Price validly tendered at or prior to the Early Tender Date by holders does not exceed the 2024 Maximum Per Series Consideration, then CFE will accept all such Notes validly tendered. However, if the Aggregate Purchase Price of all Notes validly tendered at or prior to the Early Tender Date by holders exceeds the Maximum Consideration, then CFE will (i) accept for purchase all validly tendered Notes of each series (subject to the 2024 Maximum Per Series Consideration and possible proration of the 2024 Notes) starting at the highest Acceptance Priority Level (level 1) and moving sequentially to Notes of each series having a lower Acceptance Priority Level (the lowest of which is level 6) until the Aggregate Purchase Price of all validly tendered Notes of a series, combined with the Aggregate Purchase Price of all accepted Notes of series with higher Acceptance Priority Levels, is as close as possible to, but does not exceed, the Maximum Consideration, (ii) accept on a prorated basis validly tendered Notes of the series with the next lower Acceptance Priority Level and (iii) not accept for purchase (x) any Notes of a series with an Acceptance Priority Level below the series prorated in accordance with (ii) hereof or (y) any Notes validly tendered after the applicable Early Tender Date; and
- second, if the Maximum Consideration is not exceeded at the Early Tender Date, CFE will repeat the steps described in the prior bullet using the Aggregate Purchase Price and 2024 Series Purchase Price with respect to Notes validly tendered after the Early Tender Date, but at or prior to the Expiration Date, in order to determine the aggregate principal amount of such Notes that CFE will accept for purchase. All Notes, regardless of Acceptance Priority Level, that are validly tendered at or prior to the Early Tender Date will have priority over any Notes validly tendered after the Early Tender Date.
All Notes not accepted as a result of proration or otherwise will be rejected from the Offer and will be promptly returned to the tendering Holder.
Conditions
CFE’s obligation to accept for purchase, and to pay for, any Notes validly tendered pursuant to the Offer, is conditioned upon the satisfaction of certain customary conditions as described in the Offer to Purchase. CFE reserves the right, in its sole discretion, to waive any and all conditions of the Offer. The Offer is not conditioned on any minimum amount of Notes being tendered.
The Dealer Managers
CFE has retained BBVA Securities Inc., Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and Mizuho Securities USA LLC to act as dealer managers in connection with the Offer (the “Dealer Managers“). Any questions or requests for assistance regarding the Offer may be directed to the Dealer Managers at their contact information set forth below.
| BBVA Securities Inc. 1345 Avenue of the Americas New York, New York 10105 United States of America Attn: Liability Management Toll Free: +1 800-422-8692 Collect: +1 212-728-2446 | Citigroup Global Markets Inc. 388 Greenwich Street, 4th Floor Trading New York, New York 10013 United States of America Attn: Liability Management Toll-Free: +1 800-558-3745Collect: +1 212-723-6106 | Deutsche Bank Securities Inc. 1 Columbus Circle New York, New York 10019 United States of America Attn: Liability Management Group Toll-Free: +1 855-287-1922Collect: +1 212-250-7527 | Mizuho Securities USA LLC 1271 Ave. of the Americas New York, New York 10020 United States of America Attn: Liability Management Toll-Free: +1 866-271-7403 Collect: +1 212-205-7736 |
The Tender Agent and the Information Agent
Copies of the Offer to Purchase may be obtained from Global Bondholder Services Corporation, the tender agent and the information agent for the Offer, at +1 (855) 654-2015 (toll-free) or +1 (212) 430-3774 (collect).
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