PSALM targets new cash offering, debt swap

18 Nov 2009

The Power Sector Assets and Liabilities Management (PSALM) Corporation has commenced a new cash offering and a bond exchange offer (collectively, the "Global Bond Offering") as part of its efforts to efficiently manage the liabilities of the National Power Corporation ("NPC").

The bond exchange offer will help extend the maturity of the existing loans incurred by NPC and which were transferred to PSALM as mandated by Republic Act No. 9136, the Electric Power Industry Reform Act.

Eligible for the bond exchange offer are NPC loans that will mature in 2010 and 2011. These include the USD500-million 9.875% Guaranteed Notes due on 16 March 2010, the USD700-million Zero Coupon Guaranteed Bonds due on 12 July 2010, and the USD400-million Guaranteed Floating Rate Notes due on 23 August 2011 (collectively, the "Old Bonds"), each series guaranteed by the Republic of the Philippines (the "Republic"). The Old Bonds are eligible to be exchanged for PSALM's (i) newly issued U.S. Dollar-Denominated Guaranteed Global Bonds due 2024 (the "2024 Bonds") or (ii) reopened U.S. Dollar-Denominated Guaranteed Global Bonds due 2019 (the "2019 Bonds", and together with the 2024 Bonds, the "New Global Bonds").

PSALM's new cash offering, on the other hand, consists of an offering of 2024 Bonds for cash in a maximum aggregate principal amount not to exceed USD600 million. The proceeds will be used for general corporate funding requirements, including servicing payments arising from debt and independent power producer contracts.

The Development Bank of the Philippines, Morgan Stanley & Co. International plc, and UBS AG are the joint dealer managers and bookrunners of the Global Bond Offering.

The Global Bond Offering, which is the second fund-raising activity of PSALM this year after successfully selling USD1 billion in 2019 Bonds last May, commenced on 16 November 2009 and will expire on 24 November 2009.

This announcement is not an offer of securities for sale in the United States, and any securities offered in the United States may not be offered or sold in the United States absent registration or an exemption from registration. Any offering of securities by PSALM or the Republic in the United States would be made by means of a prospectus, which would be obtainable from PSALM and would contain detailed information about PSALM and the Republic, including certain financial and statistical information. PSALM does not intend to register with the United States Securities and Exchange Commission any portion of this transaction or any of the New Global Bonds.

Strategic Communications and Partnership Division
Tel. No. (632) 9029067