PEMEX in $2 Billion Liability Management Transaction

Cleary Gottlieb represented long-time client Petróleos Mexicanos (PEMEX) in a $2 billion liability management transaction pursuant to which certain suppliers were given the opportunity to exchange outstanding invoices due from PEMEX and its productive subsidiaries for marketable 8.750% notes due 2029 (the Notes) issued by PEMEX.

The transaction was designed to provide liquidity to suppliers while allowing Pemex to convert short-term payables into long-term debt.

Suppliers could voluntarily enter into an Obligation Recognition and Repayment Agreement (ORRA) with PEMEX to exchange amounts due under certain invoices for Notes on a dollar for dollar par basis. In addition, suppliers were given the opportunity to participate in a remarketing process conducted by Citigroup Global Markets Inc. pursuant to which the Notes were offered to the market through a Rule 144A/Reg S offering. The Notes issued to suppliers and not sold pursuant to the remarketing process may be held by the suppliers or sold in a subsequent remarketing transaction.

The ORRAs were entered into on May 31, 2022 and settled on June 2, 2022. Pursuant to the ORRAs, PEMEX issued Notes in an aggregate principal amount of approximately $2.0 billion. The remarketing launched on May 31, 2022, priced on June 1, 2022, and settled on June 9, 2022. Notes in an aggregate principal amount of $1.5 billion were sold pursuant to the remarketing.

This innovative transaction reflects PEMEX’s commitment to work closely with its suppliers, giving them an opportunity to speed up the payment of amounts due to them. The transaction also helped PEMEX better manage its working capital and liquidity.