Ecopetrol S.A. Announces Results and Settlement of its Previously Announced Cash Tender Offer for Any and All of its Outstanding 4.125% Notes due 2025

Rhea-AI Summary

Ecopetrol S.A. announced the results of a cash tender offer to purchase its outstanding 4.125% Notes due 2025. The Offer expired on January 16, 2024, and all Securities validly tendered were accepted for purchase. Ecopetrol also intends to deposit funds with The Bank of New York Mellon as security for the benefit of holders of the Securities not tendered pursuant to the Offer. BBVA Securities Inc., BofA Securities, Inc., and Citigroup Global Markets, Inc. served as Dealer Managers for the Offer.

Financial Analyst

The completion of Ecopetrol's cash tender offer for its 4.125% Notes due 2025 represents a significant liability management strategy, aimed at optimizing the company's debt profile. The acceptance of approximately $737 million in principal amount of the tendered securities at a total consideration of $994.70 per $1,000 principal, excluding accrued interest, suggests a proactive approach to managing upcoming maturities.

From a financial perspective, this transaction could indicate a strategic move to lower future interest payments or to refinance existing debt at potentially lower rates, given the current interest rate environment. The successful tender offer and the concurrent offering of notes could also reflect the company's creditworthiness and market confidence in its ability to service debt. This is particularly relevant for investors who monitor debt levels and interest coverage ratios as indicators of financial health.

Additionally, the decision to set aside government obligations and cash to satisfy the remaining obligations under the indenture shows a commitment to ensuring the security and benefits of the remaining holders. This action could potentially be viewed favorably by credit rating agencies and investors, as it demonstrates a responsible approach to debt management and could influence the company's credit ratings and borrowing costs in the future.

Market Research Analyst

Market reaction to Ecopetrol's tender offer could be influenced by several factors. The tender offer's completion and the company's ability to manage its debt obligations efficiently may be perceived as a positive signal, potentially leading to an increase in investor confidence. This confidence could, in turn, have a favorable impact on the company's stock price and market valuation.

It is also important to consider the broader market context in which this tender offer occurred. The energy sector and oil companies in particular, face volatility due to fluctuating oil prices, geopolitical tensions and the global transition towards renewable energy sources. Ecopetrol's actions to strengthen its balance sheet through liability management could be a strategic response to these market conditions, aimed at ensuring financial flexibility to navigate future challenges.

Investors and analysts will likely monitor the company's future financial statements to assess the impact of this transaction on its interest expenses and overall debt levels. The reduction in debt could lead to improved financial ratios, which might be reflected in the company's stock performance and attractiveness to potential investors.

Legal Expert

The legal implications of Ecopetrol's tender offer and the subsequent satisfaction and discharge of obligations under the indenture are crucial for the legal framework governing corporate bonds. By setting aside funds specifically pledged as security for the benefit of holders of the Securities not tendered, Ecopetrol is adhering to the covenants outlined in the indenture agreement.

This action demonstrates compliance with contractual obligations and provides clarity on the rights and expectations for the remaining security holders. Such adherence to the indenture terms is essential for maintaining the integrity of the contractual agreements between issuers and bondholders. It also serves to prevent potential legal disputes by ensuring that all parties' interests are addressed as stipulated in the governing documents.

For current and future bondholders, this move could reinforce the perception of Ecopetrol as a reliable issuer that honors its contractual commitments. This is particularly relevant in the context of international bond markets, where legal compliance and the protection of investor rights are paramount for maintaining investor trust and access to global capital.

BOGOTÁ, Colombia, Jan. 19, 2024 /PRNewswire/ -- Ecopetrol S.A. ("Ecopetrol" or the "Company") (NYSE: EC) announced today the results of the previously announced cash tender offer (the "Offer") by Ecopetrol, to purchase any and all of its outstanding 4.125% Notes due 2025 (the "Securities").

The Offer expired on January 16, 2024, at 5:00 p.m., New York City time (the "Expiration Time"). The Offer was made solely pursuant to the Offer to Purchase (the "Offer to Purchase") and the related Notice of Guaranteed Delivery (the "Notice of Guaranteed Delivery"), each dated January 9, 2024.

Ecopetrol was advised by Global Bondholder Services Corporation, the tender and information agent for the Offer, that the aggregate principal amount of Securities, as set forth in the table below, was validly tendered and not validly withdrawn pursuant to the terms of the Offer.

The conditions of the Offer, including the pricing and closing of Ecopetrol's concurrent offering of notes, were satisfied.

Ecopetrol accepted for purchase all Securities validly tendered and not validly withdrawn in the Offer, and paid the Total Consideration for such Securities on January 19, 2024 (the "Settlement Date"), as set forth in the table below, plus accrued and unpaid interest on such Securities from the last interest payment date to, but excluding the Settlement Date in accordance with the terms of the Offer.

Title of Securities		CUSIP/ISIN Number		Outstanding Principal Amount		Principal Amounted Tendered and Accepted				Total Consideration(1) (2)
4.125% Notes due 2025		279158 AK5 / US279158A K55		$1,200,000,000		$737,350,000				$994.70
(1) Per $1,000 principal amount of Securities validly tendered and accepted for purchase pursuant to the Offer to Purchase. (2) Excludes accrued and unpaid interest on their purchased Securities from the last interest payment date for the Securities to, but excluding, the Settlement Date.

Furthermore, Ecopetrol intends to deposit with The Bank of New York Mellon, as trustee under the indenture governing the Securities (the "Indenture"), as trust funds in trust specifically pledged as security for, and dedicated solely to, the benefit of the holders of the Securities not tendered pursuant to the Offer, Government Obligations (as defined in the Indenture) and cash, together sufficient to pay and discharge the aggregate principal amount of such Securities, accrued and unpaid interest and any Additional Amounts (as defined in the Indenture) with respect to such Securities, as set forth in Section 401 of the Indenture. Upon such deposit and satisfaction of the conditions set forth in Section 401 of the Indenture, all obligations of Ecopetrol under the Securities not tendered pursuant to the Offer and the Indenture solely with respect to such Securities, except for those that are expressly provided to survive, will be satisfied and discharged pursuant to Section 401 of the Indenture.

BBVA Securities Inc., BofA Securities, Inc. and Citigroup Global Markets, Inc. served as Dealer Managers (the "Dealer Managers") for the Offer.

This press release is for informational purposes only and does not constitute an offer to purchase nor the solicitation of an offer to sell any Securities. The Offer was made only pursuant to the Offer to Purchase and related Notice of Guaranteed Delivery. 

No Recommendation

None of Ecopetrol, BBVA Securities Inc., BofA Securities, Inc., Citigroup Global Markets, Inc., Global Bondholder Services Corporation, or the trustee or security registrar with respect to the Securities, nor any affiliate of any of the foregoing, has made any recommendation as to whether holders should tender or refrain from tendering all or any portion of their Securities in response to the Offer or expressing any opinion as to whether the terms of the Offer are fair to any holder. Please refer to the Offer to Purchase for a description of the offer terms, conditions, disclaimers and other information applicable to the Offer.

About Ecopetrol

Ecopetrol is the largest company in Colombia and one of the main integrated energy companies in the American continent, with more than 18,000 employees. In Colombia, it is responsible for more than 60% of the hydrocarbon production of most transportation, logistics, and hydrocarbon refining systems, and it holds leading positions in the petrochemicals and gas distribution segments. With the acquisition of 51.4% of ISA's shares, the company participates in energy transmission, the management of real-time systems (XM), and the Barranquilla - Cartagena coastal highway concession. At the international level, Ecopetrol has a stake in strategic basins in the American continent, with Drilling and Exploration operations in the United States (Permian basin and the Gulf of Mexico), Brazil, and Mexico, and, through ISA and its subsidiaries, Ecopetrol holds leading positions in the power transmission business in Brazil, Chile, Peru, and Bolivia, road concessions in Chile, and the telecommunications sector.  

Disclaimer and Other Important Notices

This press release and the Offer to Purchase do not constitute an offer to purchase or the solicitation of an offer to sell Securities in any jurisdiction in which such offer or solicitation would be unlawful. In those jurisdictions where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer was deemed made on behalf of Ecopetrol by the Dealer Managers or one or more registered brokers or dealers licensed under the laws of such jurisdiction. If materials relating to the Offer come into a holder's possession, the holder is required by Ecopetrol to inform itself of and to observe all of these restrictions.

The Offer to Purchase has not been filed with or reviewed by the SEC, any state securities commission or any other regulatory authority, nor has any such commission or other regulatory authority passed upon the accuracy or adequacy of the Offer to Purchase or any of the accompanying ancillary documents delivered thereunder. Any representation to the contrary is unlawful and may be a criminal offense.

The Offer to Purchase has not been authorized by the Colombian Superintendency of Finance (Superintendencia Financiera de Colombia or the "SFC" by its acronym in Spanish) and has not been registered under the Colombian National Registry of Securities and Issuers (Registro Nacional de Valores y Emisores) or the Colombian Stock Exchange (Bolsa de Valores de Colombia or the "BVC" by its acronym in Spanish), and, accordingly, the Offer to Purchase may not constitute an offer to persons in Colombia except in circumstances which do not result in a public offering under Colombian law and must be carried out in compliance with Part 4 of Decree 2555 of 2010.

This press release may contain forward-looking statements within the meaning of Section 27A of the United States Securities Act of 1933, as amended, and Section 21E of the United States Securities Exchange Act of 1934, as amended, including those related to the Offer. Forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future, and, accordingly, such results may differ from those expressed in any forward-looking statements. Ecopetrol is not under any obligation to (and expressly disclaims any such obligation to) update forward-looking statements as a result of new information, future events or otherwise, except as required by law.

Investor Relations

Carolina Tovar Aragón
Head of Capital Markets
Carrera 13 No. 36-24, Bogotá, Colombia
e-mail: investors@ecopetrol.com.co

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SOURCE Ecopetrol S.A.

What were the results of Ecopetrol's cash tender offer for its 4.125% Notes due 2025?

The Offer expired on January 16, 2024, and all Securities validly tendered were accepted for purchase.

Who served as Dealer Managers for Ecopetrol's Offer?

BBVA Securities Inc., BofA Securities, Inc., and Citigroup Global Markets, Inc. served as Dealer Managers for the Offer.

What does Ecopetrol intend to do with the funds regarding the Securities not tendered pursuant to the Offer?

Ecopetrol intends to deposit funds with The Bank of New York Mellon as security for the benefit of holders of the Securities not tendered pursuant to the Offer.