Argentina's Arcos Dorados issues $98.23 million 6 5/8% notes in offer

By Susanna Moon

Chicago, Sept. 27 - Arcos Dorados Holdings Inc. said it settled the $89,955,000 of early tendered 7½% notes, issuing $98,225,000 of new 6 5/8% senior notes due 2023 in the exchange offer on Friday.

The company also paid $50,837.50 in cash in lieu of fractional new notes and $3,298,350.15 in cash for accrued interest in exchange for the $89,955,000, or about 29%, of 7½% notes tendered as of 5 p.m. ET on Sept. 23, the early exchange date of the exchange offer.

The exchange offer continues until 11:59 p.m. ET on Oct. 7.

The total principal amount of notes exchanged or purchased on Sept. 27 was $208,321,000, or about 67.5%, of the outstanding 7½% notes, according to a company press release.

As previously announced, Arcos Dorados Holdings is offering new dollar-denominated 6 5/8% senior notes due 2023 concurrently with the tender and exchange offers and the consent solicitation for its outstanding 7½% notes.

Proceeds from the new issue will be used to pay the principal and premium on the 7½% notes in connection with the tender offer, to repay some of Arcos Dorados Holdings' short-term debt with Banco Itau BBA SA, to unwind its cross-currency interest rate swap with Bank of America, NA and for general corporate purposes.

In the concurrent offer, the company issued $375 million of 6 5/8% senior notes due 2023 on Sept. 27, resulting in a total principal amount of new 6 5/8% notes outstanding of $473,225,000 (including the $98,225,000 of new notes issued under the exchange offer).

Arcos Dorados also paid $128,131,195.00 as tender payment and paid $4,340,086.78 in cash for accrued interest for the purchase of the $118,366,000 7½% notes tendered in the offer that ended at 5 p.m. ET on Sept. 23.

Offer background

The company previously said it received consents from holders of more than a majority in principal amount of the 7½% notes, enough to amend the indenture governing the notes. The amendments will eliminate Arcos Dorados BV's obligations to comply with substantially all of the restrictive covenants contained in the indenture.

Arcos Dorados began the offer to purchase for cash any and all outstanding 7½% notes, the offer to exchange any and all outstanding 7½% notes for newly issued dollar-denominated 6 5/8% senior notes due 2023 and the related consent solicitation on Sept. 11.

Holders could not deliver consents without tendering their notes and vice versa.

Tenders under the tender offer, the exchange offer and the consent solicitation may no longer be withdrawn.

Minimum condition satisfied

As stated before, the tender and exchange offers and consent solicitation are conditioned on the following:

• A total of more than $154.4 million of 7½% notes being tendered by the tender expiration date and/or the early exchange date;

• The issuance of at least $300 million of new 6 5/8% notes under the exchange offer and/or the concurrent offering and proceeds from the concurrent offering being greater than or equal to the total amount of the tender consideration; and

• New notes issued in the exchange offer on the early exchange settlement date or the final settlement date being fungible with the new notes issued in the concurrent offering.

As of the expiration of the tender offer and the early exchange date, the company received tenders for a total of $208.02 million of 7½% notes, which is more than the $154.4 million minimum tender amount, thus satisfying the minimum tender condition.

Tender offer details

Holders who tendered their notes by the tender expiration date will receive the tender payment of $1,082.50 in cash for each $1,000 principal amount of 7½% notes.

The company said it expects to purchase all 7½% notes accepted under the tender offer on Sept. 27, the cash tender settlement date.

Holders who tendered their notes for exchange by the early exchange date will receive the total exchange payment of $1,092.50 principal amount of new 6 5/8% notes per $1,000 principal amount of existing 7½% notes. The total exchange payment includes an early exchange payment of $30.00, payable in new notes.

Holders who tender notes for exchange after the early exchange date but on or prior to the exchange expiration date will receive the exchange payment of $1,062.50 principal amount of new notes for each $1,000 of old notes.

The company will also pay, under both the tender offer and the exchange offer, accrued interest to the settlement date.

The company said it will accept for exchange all notes tendered by the early exchange date prior to the exchange offer expiration date. The early exchange settlement date will be the day the concurrent offering of new 6 5/8% notes settles.

Promptly after the expiration of the exchange offer, the company will accept for exchange any remaining validly tendered notes.

The purpose of the tender and exchange offer and consent solicitation is to extend the maturity profile of the company's debt, according to a prior press release.

D.F. King & Co., Inc. (212 269-5550 for banks and brokers, 800 488-8095 for all others, arcosdorados@dfking.com) is the information and exchange agent.

Based in Buenos Aires, Arcos Dorados operates or franchises McDonald's-branded restaurants in Latin America and the Caribbean.

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