CAP S.A. Announces Offer to Purchase Any and All of its 7.375% Bonds Due 2036

SANTIAGO, Chile, July 8, 2011 /PRNewswire/ -- CAP S.A. ("CAP") announced today it has commenced an offer to purchase for cash any and all of its 7.375% Bonds due 2036 (the "bonds").  The bonds have an aggregate principal amount outstanding of U.S.$200 million.

The offer is being made pursuant to an offer to purchase dated July 8, 2011 (the "offer to purchase," as it may be amended or supplemented from time to time), and a related letter of transmittal (the "letter of transmittal," as it may be amended or supplemented from time to time) which set forth in more detail the terms and conditions of the offer.

The offer will expire at 5:00 p.m., New York City time, on July 19, 2011, unless extended or earlier terminated with respect to offer (the "expiration date").

The following table sets forth some of the terms of the offer for the bonds:

Holders of bonds that are, in accordance with the terms and conditions set forth in the offer to purchase, validly tendered before the expiration date and are accepted for purchase will be eligible to receive consideration for their bonds.

The purchase price for each U.S.$1,000 principal amount of bonds validly tendered and accepted for purchase pursuant to the offer shall be the price (calculated in accordance with standard market practice as described in the offer to purchase) equal to (a) the present value as of the settlement date of (i) U.S.$1,000 principal amount of the bonds that would be payable on the maturity date and (ii) the interest that would be payable on such principal amount, from the last interest payment date until the maturity date, such present value determined using a yield (the "reference yield") equal to the sum of (x) the bid-side yield on the Reference U.S. Treasury Security specified above, plus (y) the fixed spread specified above, minus (b) the accrued and unpaid interest from the last interest payment date up to, but not including, the settlement date.  In addition to the purchase price, holders whose bonds are purchased in the offer will receive accrued and unpaid interest from the last interest payment date up to, but not including, the settlement date.  The settlement date for the offer shall occur promptly after the expiration date, and CAP currently anticipates that the settlement date will be July 22, 2011.

The reference yield for the bonds will be calculated in accordance with standard market practice, as of 2:00 p.m., New York City time, on July 19, 2011 (such time, the "price determination date") using the bid price for the Reference U.S. Treasury Security as reported by the Bloomberg Government Pricing Monitor on the page specified above or, if the relevant price is not available on a timely basis or is manifestly erroneous, another recognized quotation source.

CAP's obligation to accept for purchase, and to pay the purchase price for bonds validly tendered pursuant to the offer is subject to, and conditioned upon, the satisfaction or, where applicable, CAP's waiver of a number of conditions described in the offer to purchase.  CAP reserves the right, in its sole discretion, to waive any one or more of the conditions to the offer at any time.  The offer is not contingent upon the tender of any minimum principal amount of bonds.  Withdrawal rights are not provided in the offer.

CAP has retained Citigroup Global Markets Inc. to serve as the dealer manager for the offer.  Global Bondholder Services Corporation has been retained to serve as the depositary and information agent.  

For additional information regarding the terms of the offer, please contact Citigroup Global Markets Inc. at +1 (800) 558-3745 (toll free within U.S.) or +1 (212) 723-6108 (collect).  Requests for documents and questions regarding the tender of bonds may be directed to Global Bondholder Services Corporation at +1 (866) 470-3900 (toll free within U.S.) or +1 (212) 430-3774 (collect).  

The offer to purchase and related letter of transmittal are expected to be distributed to holders of bonds beginning today.  Copies of the offer to purchase and the letter of transmittal may also be obtained at no charge from Global Bondholder Services Corporation.

None of CAP, its board of directors, the dealer manager, the depository or the information agent makes any recommendation as to whether any holder of the bonds should tender or refrain from tendering all or any portion of the principal amount of the bonds.

This press release is neither an offer to purchase nor a solicitation to buy these bonds nor is it a solicitation for acceptance of any offer.  CAP is making the offer only by, and pursuant to the terms of, the offer to purchase and the related letter of transmittal.  The offer is not being made to (nor will tenders of bonds be accepted from or on behalf of) holders of bonds in any jurisdiction in which the making or acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction.  This announcement must be read in conjunction with the offer to purchase and the related letter of transmittal.

CAP is an integrated ferrous metals company, composed of the largest iron mining company and the largest producer of steel in Chile.  CAP exports iron pellets and other iron ore products, primarily to Asia, and CAP believes that it owns mining rights to a substantial portion of Chile's iron ore resources.  CAP also supplies both flat and long steel products, principally to Chilean customers, and have a greater than 50% market share in Chile's domestic steel market, based on historical sales volumes.

Certain statements in this release, including without limitation the anticipated timing and completion of the offer, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances.  Actual results may differ materially from those included in these statements due to a variety of factors, including without limitation the level of interest in and the actual completion of the proposed offer.

SOURCE CAP S.A.