Mexican state-owned oil and gas company Pemex will receive a contribution equivalent to $5 billion from the country’s government to repay and refinance debt.
Pemex announced on Wednesday a series of measures intended to improve its financial condition. This operation considers a capital contribution from the Federal Government equivalent to $5 billion to be used for the prepayment of debt, the company said.
In line with the strategy of strengthening the company’s finances under a zero net indebtedness premise in real terms, Pemex structured the transaction in three parts.
Namely, Pemex will receive a capital contribution equivalent to $5 billion. The company intends to use the proceeds for the prepayment of bonds in the short part of the curve with maturities between 2020 and 2023.
Furthermore, a new issue in 7, 10, and 30 years will be made for the refinancing of short-term debt.
Finally, Pemex will launch an exchange offer to the effect of providing additional support to maturities in the short, intermediate and long part of the curve, in order to improve the company’s amortization profile.
Proceeds from this transaction will be used to ensure a reduction in the outstanding balance of Pemex’s debt, an improvement in its liquidity indicators, reducing short-term maturities and generating savings on interest expense, which is aimed at strengthening the financial position of Pemex, in accordance with its business plan.
It is anticipated that this transaction will have participation of investors from the United States, Europe, Asia, and Mexico.
Mexican Ministry of Finance and Public Credit said in a separate statement on Wednesday that this action is part of the government’s ongoing efforts to strengthen the financial stability of Pemex and enhance its profitability and long-term strategic contribution to the Mexican economy.
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