Petrobras’ $3.97 Billion Cash Tender Offers

Cleary Gottlieb represented Petróleo Brasileiro S.A. (Petrobras) in abbreviated five-day tender offers targeting nineteen series of notes denominated in US dollars, Euro and Pounds Sterling issued by Petrobras’s Dutch finance subsidiary, Petrobras Global Finance B.V. (PGF). 

The tender offers launched on September 10, 2020, expired on September 16, 2020 and settled on September 21, 2020.

Abbreviated tender offers were first sanctioned by the SEC in 2015 in a no-action letter requested by a group of law firms, including Cleary. Market participants have since incorporated features to such offers to help issuers maximize the use of resources available for an offer, while mitigating their financial exposure to a type of offer that is required to be extended to any and all of the notes of a series subject to the offer.

PGF’s tender offer was structured with “knockout“ and “hopscotch” features. The “knockout” feature allowed PGF to establish a tender cap of $4 billion to be used to fund the transaction. The nineteen series of notes were assigned an acceptance priority level, and PGF was permitted to “knock out” (i.e., refrain from repurchasing) all notes of a series tendered to the extent that the repurchase of such notes would cause PGF to exceed the tender cap. The “hopscotch” feature allowed PGF to skip the series of notes that would have caused the tender cap to be exceeded, and repurchase series of notes in subsequent acceptance priority levels as long as PGF was able to repurchase the full amount of tendered notes of each series without exceeding the tender cap. As a result, PGF used $3.97 billion to repurchase approximately $3.0 billion, €330.8 million and £85.5 million aggregate principal amount of notes across twelve series.

PGF engaged BB Securities Limited, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Goldman Sachs & Co. LLC, Mizuho Securities USA LLC and MUFG Securities Americas Inc. to act as dealer managers with respect to the Offers. Global Bondholder Services Corporation acted as the depositary and information agent for the Offers.

Petrobras is one of the world’s largest integrated oil and gas companies, engaging in a broad range of oil and gas activities. The firm has represented Petrobras for many years in significant SEC reporting, corporate governance, financing and litigation matters.

The Cleary team representing Petrobras included partners Francesca Odell (Picture), Manuel Silva, and David Lopez and associates Andrea Lavourinha and Susan Levinson. Partner Jason Factor, senior attorney David Stewart Fisher, and associate Michael Sims provided tax advice. All lawyers are based in New York, except for Andrea Lavourinha, who is based in São Paulo.

Involved fees earner: Jason Factor – Cleary Gottlieb Steen & Hamilton; Andrea Lavourinha – Cleary Gottlieb Steen & Hamilton; Susan Levinson – Cleary Gottlieb Steen & Hamilton; David Lopez – Cleary Gottlieb Steen & Hamilton; Francesca Odell – Cleary Gottlieb Steen & Hamilton; Manuel Silva – Cleary Gottlieb Steen & Hamilton; Michael Sims – Cleary Gottlieb Steen & Hamilton; David Stewart Fisher – Cleary Gottlieb Steen & Hamilton;

Law Firms: Cleary Gottlieb Steen & Hamilton;

Clients: Petrobras;

Author: Ambrogio Visconti