MercoPress. South Atlantic News Agency

Venezuela’s CITGO offering to pay 12% for a 7 year bond

The company has approximately 6,500 independently owned and operated CITGO-branded retail outlets located east of the Rocky Mountains

US based CITGO Petroleum Corporation, a wholly owned subsidiary of Venezuela's state oil company Petroleos de Venezuela S.A. (PDVSA), is coming to market with a 7 year bond and offering to pay 11.75% to 12% on the debt.

The issue will rank equally (pari passu) with the company's Credit Facility and be considered Senior Secured debt which will be secured by a first lien on the issuer's three refineries in the United States, inventory, certain equity interests and other assets securing the Credit Facility.

The company was originally seeking an issue size of 1.5 billion USD in two issues -- a seven year and a ten year -- but has reduced its expectations and is now seeking 300 - 350 million USD in just the seven year bond. The bond will be callable by the company after four years.

The refineries that will secure the debt are in Lemont, Illinois (crude capacity of 167 million BPD), Lake Charles, Louisiana, (crude capacity of 425 million BPD), and Corpus Christi, Texas (crude capacity of 157 million BPD).

“We are one of the largest independent crude oil refiners and marketers of refined products in the United States as measured by refinery capacity,” states the CITGO prospectus.

“We own and operate three petroleum refineries with a total rated crude oil capacity of approximately 749,000 barrels per day, or bpd, located in Lake Charles, Louisiana, Corpus Christi, Texas and Lemont, Illinois. Our refining operations are supported by an extensive distribution network, which provides reliable access to our refined product end-markets.”

“We own 37 refined product terminals spread across 17 states with a total storage capacity of 18.4 million barrels, and have equity ownership of an additional 2.1 million barrels of refined product storage capacity through our joint ownership of an additional 11 terminals.”

“We also have access to over 150 third-party terminals through exchange, terminaling and similar arrangements. We believe that we are the seventh largest branded gasoline supplier within the United States as measured by sales volume, with an approximate 5% market share of the branded gasoline market”.

“There are approximately 6,500 independently owned and operated CITGO-branded retail outlets located in our markets, which are located east of the Rocky Mountains. ”

“We and our predecessors have had a recognized brand presence in the United States for approximately 100 years.”

“We believe that we are the third largest and the most complex independent refiner in the United States, with each of our refineries capable of processing large volumes of lower quality, heavy sour crude oils into a flexible range of refined products.”