PNM Resources (NYSE: PNM) today announced the commencement of a modified “Dutch Auction” tender offer (the “Tender Offer”) for a portion of its outstanding 9.25% Senior Notes, Series A, due 2015 (the “Notes”).

PNM Resources is offering to purchase up to $150,000,000 (the “Tender Cap”) aggregate principal amount of the Notes in accordance with the modified Dutch Auction procedures described below. As of Jan. 4, 2009, $350,000,000 aggregate principal amount of Notes were outstanding.

The Tender Offer is contingent on certain conditions, including the closing of the pending sale of the PNM utility gas operations. The $620 million sale to New Mexico Gas Company, Inc. is scheduled to close on Jan. 30, 2009.

The Tender Offer will expire at 9 a.m. New York City time on Feb. 3, 2009, unless extended or earlier terminated by PNM Resources (such date and time, as the same may be extended, the “Expiration Date”). The Tender Offer is subject to the satisfaction of certain conditions as described in the offer to purchase, dated Jan. 5, 2009. Holders of Notes (the “Noteholders”) must validly tender and not validly withdraw their Notes on or prior to 5 p.m. New York City time on Jan. 16, 2009, unless extended by PNM Resources (such date and time, as the same may be extended, the “Early Participation Date”), in order to receive the Total Consideration for their Notes.

The “Total Consideration” for each $1,000 principal amount of Notes validly tendered (and not validly withdrawn) pursuant to the Tender Offer on or prior to the Early Participation Date and accepted for purchase by PNM Resources will be equal to the Clearing Price (as defined below). The Total Consideration includes an amount (the “Early Participation Payment”) equal to $30 for each $1,000 principal amount of Notes accepted for purchase. Notes tendered may be validly withdrawn at any time prior to 5 p.m. New York City time on Jan. 16, 2009, unless extended by PNM Resources (such date and time, as the same may be extended, the “Withdrawal Date”), but not thereafter.

The Tender Offer is being conducted as a modified “Dutch Auction.” This means that Noteholders who elect to participate must specify the price they would be willing to receive in exchange for each $1,000 principal amount of Notes they choose to tender in the Tender Offer. The price that Noteholders specify for each $1,000 principal amount of Notes must be in increments of $2.50, and must be within a range between $830 (the “Minimum Offer Price”) and $930 (the “Maximum Offer Price”) per $1,000 principal amount of Notes.