LUKOIL Launches Offering of Convertible Bonds
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Press Release: 9 December 2010
OAO LUKOIL Launches Offering of US$1,500 Million Senior Unsecured Convertible Bonds
OAO LUKOIL ("LUKOIL") has launched an offering of US$1,500 million principal amount of senior unsecured convertible bonds (the "Convertible Bonds") due June 2015 which are convertible into American Depositary Receipts ("ADRs") listed on the London Stock Exchange, each representing one ordinary share of LUKOIL (the "Offering"). The Convertible Bonds will be issued by LUKOIL International Finance B.V. (the "Issuer"), a Dutch wholly owned subsidiary of LUKOIL, and will be guaranteed by LUKOIL. The net proceeds from the Offering will be used by LUKOIL for general corporate purposes.
The Convertible Bonds are expected to carry a coupon of 2.50 - 3.00 per cent per annum payable semi-annually in arrear, and the conversion price is expected to be set at a premium of 30 per cent above the reference price (the volume weighted average price of an ADR between launch and pricing), as determined at the time of pricing. The conversion price of the Convertible Bonds will be subject to standard convertible market conversion price adjustments, also including an adjustment for any cash dividends in respect of any 12-month period commencing on the Issue Date which exceed the dividend threshold of US$1.75 per ADR per annum.
The Convertible Bonds will be issued at 100 per cent of their principal amount and, unless previously redeemed, converted or cancelled, will mature after four and a half years post issue on 16 June 2015. The Issuer will have the option to redeem all of the Convertible Bonds at any time after the third anniversary of the issue date plus fifteen days at the principal amount together with accrued interest, if the value of the ADRs deliverable on conversion of a Convertible Bond would exceed 140 per cent of the principal amount of such a Convertible Bond over a specified period.
Bondholders will have the right to convert their bonds into ADRs of LUKOIL at any point from 40 days after the issue date to the close of business on the sixth dealing day prior to the final maturity date. Upon exercise of conversion rights, bondholders will receive (at the option of the Issuer) either ADRs, or a cash settlement amount, or a combination of ADRs and a cash settlement amount, as more fully described in the terms and conditions of the Convertible Bonds.
The pricing for the Offering is expected to take place later today and settlement and issuance of the Convertible Bonds is expected to occur on or around 16 December 2010.
After settlement of the Offering, LUKOIL will make an application to list the Convertible Bonds on the Official List of the UKLA and for the Convertible Bonds to trade on the PSM segment of the London Stock Exchange.
Barclays Capital, Citigroup Global Markets Limited, and Deutsche Bank AG, London Branch are acting as Joint Bookrunners and Joint Lead Managers in connection with the Offering.
About OAO LUKOIL (LSE: LKOD):
LUKOIL is one of the world’s leading vertically integrated oil & gas companies. The main activities of the Company are exploration and production of oil & gas, production of petroleum products and petrochemicals, and marketing of these outputs. Most of the Company's exploration and production activity is located in Russia, and its main resource base is in Western Siberia. LUKOIL owns modern refineries, gas processing and petrochemical plants located in Russia, Eastern Europe and near-abroad countries. Most of the Company's production is sold on the international market. LUKOIL petroleum products are sold in Russia, Eastern and Western Europe, near-abroad countries and the USA. For more information, visit www.lukoil.com.
THE INFORMATION HEREIN IS INDICATIVE ONLY. ALTHOUGH THE INDICATIVE INFORMATION HEREIN IS REFLECTIVE OF THE TERMS OF THE SECURITIES CONTEMPLATED AS OF THE TIME OF THIS COMMUNICATION, THERE IS NO ASSURANCE THAT THE SECURITIES WILL ACTUALLY BE ISSUED. THE SECURITIES WILL BE ISSUED ON THE BASIS OF FINAL TERMS AND CONDITIONS THAT ARE EXPECTED TO BE DELIVERED TO INVESTORS PRIOR TO OR UPON SETTLEMENT. BEFORE MAKING ANY INVESTMENT DECISION AND ENTERING INTO ANY TRANSACTION IN RELATION TO THE SECURITIES, INVESTORS SHOULD TAKE STEPS TO ENSURE THAT THEY UNDERSTAND THE TRANSACTION AND HAVE MADE AN INDEPENDENT ASSESSMENT OF THE APPROPRIATENESS OF THE TRANSACTION IN THE LIGHT OF THEIR OWN OBJECTIVES. INVESTORS SHOULD MAKE SURE THAT THEY HAVE SUFFICIENT INFORMATION AVAILABLE IN RELATION TO OAO LUKOIL AND THE ADRS BEFORE MAKING AN INVESTMENT IN THE SECURITIES. IN THIS CONTEXT, INVESTORS SHOULD PARTICULARLY NOTE THAT THERE IS NO INTENTION TO PRODUCE ANY FORMAL PROSPECTUS OR SIMILAR DOCUMENTATION IN CONNECTION WITH THE OFFERING OR ISSUANCE OF THE SECURITIES.
ANY DECISION TO PURCHASE ANY OF THE SECURITIES SHOULD ONLY BE MADE ON THE BASIS OF AN INDEPENDENT REVIEW BY A PROSPECTIVE INVESTOR OF THE ISSUER’S AND THE GUARANTOR’S PUBLICLY AVAILABLE INFORMATION. NEITHER THE JOINT LEAD MANAGERS NOR ANY OF THEIR RESPECTIVE AFFILIATES ACCEPT ANY LIABILITY ARISING FROM THE USE OF, OR MAKE ANY REPRESENTATION AS TO THE ACCURACY OR COMPLETENESS OF, THIS DOCUMENT OR THE ISSUER’S AND THE GUARANTOR’S PUBLICLY AVAILABLE INFORMATION. THE INFORMATION CONTAINED IN THIS DOCUMENT IS SUBJECT TO CHANGE WITHOUT NOTICE.
THIS DOCUMENT IS NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY IN OR INTO THE UNITED STATES OR ANY OTHER JURISDICTION IN WHICH PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL. THIS DOCUMENT IS NOT AN OFFER TO SELL SECURITIES OR THE SOLICITATION OF ANY OFFER TO BUY SECURITIES, NOR SHALL THERE BE ANY OFFER OF SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SALE WOULD BE UNLAWFUL. THE SECURITIES MENTIONED IN THIS DOCUMENT HAVE NOT BEEN AND WILL NOT BE REGISTERED IN THE UNITED STATES UNDER THE US SECURITIES ACT OF 1933, AS AMENDED (THE "US SECURITIES ACT"), AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES, ABSENT REGISTRATION OR EXEMPTION FROM REGISTRATION UNDER THE US SECURITIES ACT. THERE WILL BE NO PUBLIC OFFER OF THE SECURITIES IN THE UNITED STATES OR IN ANY OTHER JURISDICTION.
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NO ACTION HAS BEEN TAKEN BY THE ISSUER, THE GUARANTOR, THE JOINT LEAD MANAGERS OR ANY OF THEIR RESPECTIVE AFFILIATES THAT WOULD PERMIT AN OFFERING OF THE SECURITIES OR POSSESSION OR DISTRIBUTION OF THIS DOCUMENT OR ANY OFFERING OR PUBLICITY MATERIAL RELATING TO SUCH SECURITIES IN ANY JURISDICTION WHERE ACTION FOR THAT PURPOSE IS REQUIRED. PERSONS INTO WHOSE POSSESSION THIS DOCUMENT COMES ARE REQUIRED BY THE ISSUER, THE GUARANTOR AND THE JOINT LEAD MANAGERS TO INFORM THEMSELVES ABOUT AND TO OBSERVE ANY SUCH RESTRICTIONS.
THIS DOCUMENT AND THE OFFER WHEN MADE ARE ONLY ADDRESSED TO AND DIRECTED, IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA WHICH HAVE IMPLEMENTED THE PROSPECTUS DIRECTIVE (EACH, A "RELEVANT MEMBER STATE"), AT PERSONS WHO ARE "QUALIFIED INVESTORS" WITHIN THE MEANING OF ARTICLE 2(1)(E) OF THE PROSPECTUS DIRECTIVE (DIRECTIVE 2003/71/EC) ("QUALIFIED INVESTORS"). EACH PERSON WHO INITIALLY ACQUIRES ANY SECURITIES OR TO WHOM ANY OFFER OF SECURITIES MAY BE MADE WILL BE DEEMED TO HAVE REPRESENTED, ACKNOWLEDGED AND AGREED THAT IT IS A "QUALIFIED INVESTOR" WITHIN THE MEANING OF ARTICLE 2(1)(E) OF THE PROSPECTUS DIRECTIVE.
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