CEZ Announces EUR450 Million Exchangeable Bond for MOL Shares

Czech 70% state-owned utility CEZ AS (BAACEZ.PR) announced an offering of approximately 450 million euro ($612 million) guaranteed exchangeable bonds for Hungarian oil and gas company MOL Nyrt. (MOL.BU) in a release on Tuesday.

MAIN FACTS:

- The bonds are exchangeable for ordinary shares of MOL in between Jan. 25 and July 21, 2017.

- Pricing will be announced on Tuesday and the bonds are expected to settle on or around Feb. 4.

- CEZ will issue the bonds in EUR100,000 denominations with a maturity of three years and six months. They are expected to carry a coupon in the range of 0.00% to 0.50% per annum payable annually in arrear, subject to a short first coupon, commencing Aug 4, 2014.

- The initial exchange price will be set at a premium of between 30%-35% over the volume weighted average price of the shares on the Budapest Stock Exchange between launch and pricing of the bonds.

- The bonds will be issued by CEZ MH B.V., a 100% subsidiary of CEZ incorporated under the laws of the Netherlands. The issuer's obligations under the bonds will be guaranteed by CEZ, which is rated A2 by Moody's and A-minus by Standard & Poor's. The bonds have received a preliminary rating of A2 by Moody's and are expected to be rated A-minus by Standard & Poor's.

- CEZ will have the option to redeem the bonds on or after Feb. 24, 2017 at their principal amount together with accrued but unpaid interest, if the value of the shares deliverable upon exchange of the bonds exceeds 130% of the principal amount of the bonds for a specified period, in accordance with the terms and conditions.

- CEZ retains the right to redeem the bonds before Feb. 24, 2017 at the greater of either the principal amount of the bonds, or the fair bond value, or the parity value, together with accrued interest or on or after Feb. 24, 2017 at the principal amount of the bonds together with accrued interest, if CEZ is required to gross up on account of taxes or if 85% or more in principal amount of the bonds have been redeemed, exchanged or purchased and canceled.

- CEZ will also have the right to redeem the bonds at any time, at the greater of either the principal amount of the bonds, or the fair bond value or the parity value if a tender offer is made in respect of the shares.

- The offering is managed by Barclays Bank PLC and Deutsche Bank AG, London Branch acting as Joint Global Coordinators and Joint Bookrunners, and HSBC Bank plc and Societe Generale Corporate & Investment Banking acting as Joint Bookrunners.

- CEZ was trading down 0.1% or CZK12.42 at CZK514.10 at 10:40 GMT and MOL was trading down 0.5% or HUF70 at HUF13,760.

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