CARACAS -- Petroquimica de Venezuela, S.A. ("Pequiven") announced that it has entered into a Lock-Up Agreement (the "Lock-Up Agreement") with the holders of approximately 79% in aggregate principal amount of the $250 million of 8.29% Secured Bonds due 2020 issued by FertiNitro Finance Inc. in connection with the FertiNitro fertilizer project (the "Bonds"), providing for Pequiven (or an affiliate) to launch, no later than November 30, 2011, a tender offer for the Bonds. Holders who tender on or before 5:00 p.m. on the 10th business day following the commencement of the tender offer ("Early Tender Date") shall receive for each $1,000 original principal amount of Bonds a payment in the amount of $1,049.70 ("Total Consideration") plus accrued and unpaid interest ("Accrued Interest"). Those who tender after the Early Tender Date but at or prior to 11:59 p.m. New York City time on the expiration date of the tender offer shall receive for each $1,000 original principal amount of Bonds a payment in the amount of $1,000 plus Accrued Interest.
Bondholders that tender their Bonds will be deemed (i) to waive any and all defaults or prospective defaults under the indenture and the other financing documents governing the Bonds, and (ii) to consent to certain amendments and modifications thereto, including without limitation the elimination of substantially all restrictive covenants and events of default and the release of all collateral.
Bondholders that are parties to the Lock-Up Agreement (the "Lock-Up Holders") have agreed to tender all of their Bonds on or prior to the Early Tender Date, including Bonds they subsequently acquire. The Lock-Up Holders have further agreed they will not transfer any Bonds unless the transferee is or becomes a Lock-Up Holder as a condition to the transfer.
Bondholders may join the Lock-Up Agreement through the Early Tender Date.
The Lock-Up Holders have also agreed not to take any action under the indenture or other financing documents which interferes with the operation of the project in the ordinary course of business, including the exercise of any rights or remedies.
Pequiven or its affiliate's obligation to conduct and consummate the tender offer will be subject to the satisfaction of the conditions that the Lock-Up Holders comply in all material respects with their obligations under the Lock-Up Agreement, and its obligation to consummate the tender offer will be subject to the further condition that Bonds representing more than seventy-five percent (75%) of the principal amount of all Bonds outstanding have been tendered in the tender offer.
Costing $1.1 billion dollars to build, FertiNitro, located in the Jose Petrochemical Complex in Venezuela, ranks as one of the world's largest nitrogen-based fertilizer plants, with nameplate daily production capacity of 1.2 million MT of ammonia and 1.5 million MT of urea. Of total revenues, 80% are derived from urea sales and the remainder from ammonia. Before Venezuelan President Hugo Chavez nationalized it in October 2010, FertiNitro was structured as 35% owned by a Koch Industries, Inc. subsidiary, 35% by Pequiven, 20% by a Snamprogetti S.p. subsidiary, and 10% by a Cerveceria Polar, C.A. subsidiary.
As a result of the nationalization, Koch Industries has launched an arbitration case against Venezuela before the dispute body of the World Bank, the International Center for Settlement of Investment Disputes (ICSID). Koch is a closely-held corporation owned by the Koch brothers, stalwart funders of the right-wing US Tea-Party.
Pequiven is a corporation (sociedad anonima) organized under the laws of Venezuela and is wholly-owned by Venezuela. Pequiven and its predecessor entity have operated for over 30 years in many aspects of the petrochemical business. Pequiven is organized into three business units: (i) fertilizers, (ii) olefins and plastics, and (iii) industrial products. Pequiven's fertilizer group is responsible for the production, marketing, and distribution of various fertilizer products, with a current overall installed capacity of nitrogen-based fertilizers of approximately 1.97 million metric tons per year and an expected overall installed capacity of nitrogen‑based fertilizers for 2013 of approximately 2.6 million metric tons per year. 9/28/2011 Fitch Affirms CCC Rating on Venezuela's Expropriated FertiNitro7/27/2011 Tea Party's Koch Brothers Sue Venezuela 10/11/2010 Venezuela Nationalizes Auto Lubricants, Fertilizer Firms6/26/2005 ‘Pequiven is independent’ 10/25/2004 Pequiven studies fertilizer venture