World’s Largest Natural Gas Company in $1.87 Billion Bond Offerings

July 19, 2005

Cleary Gottlieb acted as U.S., English and Russian counsel to open joint stock company Gazprom and Blue Stream Pipeline Company B.V. in the Rule 144A/Reg. S offering of $647 million 5.625% loan participation notes due 2013 and the Reg. S offering of $1.222 billion 4.505% loan participation notes due 2013 guaranteed by SACE S.p.A., the Italian state export credit agency. The notes are listed on the Irish Stock Exchange. Deutsche Bank and MCC served as joint lead managers of the offerings.

Each tranche of notes, issued by Luxembourg orphan SPV, Gazstream S.A., financed loans to both Gazprom and BSPC (with the loans to BSPC being guaranteed by Gazprom). Gazprom and BSPC used the loan proceeds to prepay indebtedness incurred constructing the Blue Stream natural gas pipeline from Russia to Turkey under the Black Sea. This was the first offering of loan participation notes by a Russian company in which the proceeds were used to make loans to two separate borrowers; the first by a Russian company to be listed on the Irish Stock Exchange; and the first by a Russian company to be issued in accordance with the European Union Prospectus Directive that was implemented on July 1, 2005. The notes were also the first capital markets instruments to be guaranteed by SACE.   

Gazprom, which is majority-owned by the Russian government and the world’s largest producer and exporter of natural gas, supplies nearly all of the natural gas consumed in Russia and a quarter of the natural gas supplied to the European market. Cleary Gottlieb has represented Gazprom in many transactions since 1996, including offerings of more than $7.3 billion in bonds from 2003 to 2005. Recent capital markets transactions have included the first bonds sold by a Russian company to be rated investment-grade by S&P or Fitch which were the first export-backed bonds sold by a Russian company (July 2004); the longest-maturity bonds issued by a Russian company (April 2004); the establishment of the first MTN program in Russia using a loan participation note structure (September 2003); and the largest single-series debt offering by a Russian company (February 2003).  

Blue Stream Pipeline Company is a joint venture between Gazprom and Eni S.p.A., an Italian energy company, and is the operator of the Blue Stream pipeline. Cleary also represented Gazprom in arranging its portion of the original financing for the construction of the Blue Stream pipeline, in 2000.