http://www.reuters.com/article/2010/06/24/venezuela-citgo-idUSN2420986320100624

Thu Jun 24, 2010 6:25pm EDT

* Debt package follows failure of bond issue in May

* Bonds, loans and credit line to pay down debt (Adds details, CITGO comment)

CARACAS, June 24 (Reuters) - Troubled U.S. refining company Citgo said on Thursday it had refinanced $2.1 billion of debt with a $300 million bond, plus bank loans and a credit line, after the failure of a planned $1.5 billion bond last month.

Citgo has increased its debt levels in recent years because of demands for resources made by its owner, Venezuela's PDVSA, and operational problems that resulted in net losses in the first quarter of the year.

The refiner said the new funds will be used to pre-pay old debt and to finish a project to produce low sulphur diesel in line with U.S. law.

The bonds and loans are guaranteed by CITGO assets in the United States.

"This deal clearly shows the solidity of CITGO and the trust placed in our management and operational capacity by the international financial sector, which is especially significant in the context of the current global crisis," CITGO president Alejandro Granado said in a statement.

In addition to the $300 million bond, which has an 11 percent coupon, the refinancing deal includes a $350 million, 5-year loan, a $700 million, 7-year loan, and a $750 million 3-year credit line.

The company did not specify which banks were involved in the operation.

Last month, there was "inadequate demand" for the issue of $1.5 billion because of "investor concerns about the issuer's exposure to Venezuela, as well as market volatility," according to Reuters Loan Pricing Corporation.[ID:nRLP07331a] (Reporting by Frank Daniel; Editing by Jan Paschal)