Republic of Panama Announces Invitation to Sell for Cash in a Modified Dutch Auction

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Jan 17, 2012, 06:27 ET

PANAMA CITY, Jan. 17, 2012 /PRNewswire/ -- The Republic of Panama ("Panama") announced today an invitation (the "Cash Invitation") to eligible holders of its 7.250% Global Bonds due 2015 (ISIN: US698299AU88; CUSIP: 698299AU8; Common Code: 020635525) (the "2015 Bonds") to submit, in a modified Dutch auction, offers to sell the 2015 Bonds for cash, subject to the conditions described in the invitation document dated January 17, 2012 (the "Cash Invitation Document"). Holders of the 2015 Bonds located or resident in certain non-U.S. jurisdictions may not participate in the Cash Invitation before confirming their status as qualified investors or that they meet other eligibility standards.

The aggregate principal amount of the 2015 Bonds outstanding is U.S.$1,471,000,000. Panama reserves the right to determine, in its sole discretion, the aggregate principal amount of 2015 Bonds that it will accept pursuant to the Cash Invitation. The Cash Invitation will commence on January 17, 2012, and expire at 5:00 P.M., New York City time, on January 24, 2012, unless extended or earlier terminated by Panama (the "Expiration Date").

The cash amount that will be paid for each U.S.$1,000 principal amount of the 2015 Bonds sold pursuant to the Cash Invitation will equal the sum of the Base Purchase Price and the Clearing Cash Premium, plus accrued and unpaid interest. The Base Purchase Price will be based on the yield of the U.S. Treasury 0.250% Note due January 15, 2015 (the "UST Benchmark Rate") plus a spread of 1.352%. The Clearing Cash Premium will be determined by Panama in its sole discretion pursuant to a modified Dutch auction process. The minimum Clearing Cash Premium is zero.

The UST Benchmark Rate will be calculated based on the applicable bid-side prices as reported on Bloomberg screen PX5 at approximately 8:30 A.M., New York City time, on the Expiration Date.

Panama is conducting a concurrent exchange invitation (the "Concurrent Exchange Invitation") for eligible holders to submit offers to exchange the 2015 Bonds for 6.700% U.S. Dollar-Denominated Amortizing Global Bonds due 2036 (the "Reopened Bonds") and, if Panama determines to pay an additional amount of cash, a U.S. dollar amount of cash as so determined, but reserves the right to cancel the Concurrent Exchange Invitation at any time. The Cash Invitation and the Concurrent Exchange Invitation are conditioned upon the settlement of an issue of local Panamanian bonds or another financing, in either case satisfactory to Panama, which we refer to as the "Financing Condition" and which Panama may waive in its sole discretion. The Cash Invitation is not conditioned on the results of the Concurrent Exchange Invitation, and the Concurrent Exchange Invitation is not conditioned on the results of the Cash Invitation. Any individual 2015 Bond may be offered for sale in the Cash Invitation or offered for exchange in the Concurrent Exchange Invitation, but may not be offered in both invitations. Panama currently expects it will be willing to accept a smaller principal amount of the 2015 Bonds for purchase through the Cash Invitation than for exchange through the Concurrent Exchange Invitation.

At or around 3:00 P.M., New York City time, on January 25, 2012, the business day after the Expiration Date, or as soon as possible thereafter, Panama will announce whether it will accept any offers to sell the 2015 Bonds and if so, the Clearing Cash Premium, the aggregate principal amount of the 2015 Bonds it will accept for purchase and information with respect to proration, in each case subject to the satisfaction or waiver of the Financing Condition. Panama, in its sole and absolute discretion, may accept all, some, or no offers to sell the 2015 Bonds.

At or around 5:00 P.M., New York City time, on January 30, 2012, or as soon thereafter as practicable, Panama will announce whether the Financing Condition has been satisfied or waived and, accordingly, whether it will purchase 2015 Bonds pursuant to the Cash Invitation.

The settlement date for the 2015 Bonds purchased pursuant to the Cash Invitation is currently expected to be February 1, 2012.

Panama reserves the right, in its sole discretion, to extend, amend or terminate the Cash Invitation. Any such extension, amendment or termination will be announced by Panama by press release issued to PRNewswire (or other appropriate international news service), no later than 9:00 A.M., New York City time, on the business day following such extension, amendment or termination. The early termination or duration of any extension shall be within Panama's sole and absolute discretion. If extended, the final day of such extension period shall be the new Expiration Date.

Further Information

Copies of the Cash Invitation Document may be obtained free of charge by eligible participants from the information and tender agent by visiting the Cash Invitation website at www.bondcom.com/panama.

Holders of the 2015 Bonds considering participating in the Cash Invitation should carefully consider the risk factors discussed under "Risk Factors" in the Cash Invitation Document.

Information and Tender Agent

The information and tender agent for the Cash Invitation is Bondholder Communications Group, LLC.

Bondholder Communications Group, LLC is located at 30 Broad St., 46th Floor, New York, NY 10004 (Attention: Ramona Peters). Bondholder Communications Group, LLC can be reached at the following numbers:1-888-385-2663 (toll free); +1-212-809-2663 (call collect).

Joint Dealer Managers

Goldman, Sachs & Co. and Citigroup Global Markets Inc. are acting as Joint Dealer Managers for the Cash Invitation.

Goldman, Sachs & Co. can be reached by telephone at the following numbers: +1-800-828-3182 (toll free); +1-212-902-5183 (call collect).

Citigroup Global Markets Inc. can be reached by telephone at the following numbers: +1- 800-558-3745 (toll free); +1- 212-723-6108 (call collect).

Important Notice

Panama is making the Cash Invitation only in those jurisdictions where it is legal to do so. The Cash Invitation is void in all jurisdictions where it is prohibited. If materials relating to the Cash Invitation come into your possession, you are required by Panama to inform yourself of and to observe all of these restrictions. The materials relating to the Cash Invitation do not constitute, and may not be used in connection with, a solicitation in any place where solicitations are not permitted by law. If a jurisdiction requires that the Cash Invitation be made by a licensed broker or dealer and either Joint Dealer Manager or any affiliate of a Joint Dealer Manager is a licensed broker or dealer in that jurisdiction, the Cash Invitation shall be deemed to be made by such Joint Dealer Manager or such affiliate on behalf of Panama in that jurisdiction.

Important Notice for Non-U.S. Holders

In the United Kingdom this document and the Cash Invitation are addressed solely to (a) persons with professional experience in matters relating to investments who fall within Article 19(5) of the U.K. Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the "Order"); and (ii) persons falling within Article 49(2)(a) to (d) of the Order (such a person, a "relevant person"). In the United Kingdom, a person other than a relevant person should not act or rely on this document or the Cash Invitation or any of their contents. In the United Kingdom, any investment or investment activity to which this document or the Cash Invitation relate is available only to relevant persons and will be engaged in only with such persons.

In any non-U.S. jurisdictions where the Cash Invitation is subject to restrictions under the local laws and regulations, holders of the 2015 Bonds shall be required and deemed to make certain representations and warranties including those related to their status as eligible holders before having access to the offering materials relating to the Cash Invitation and before submitting their offers.

SOURCE The Republic of Panama