Grupo Idesa extends tender offer deadlines for 7 7/8% notes

By Marisa Wong

Los Angeles, May 11 – Mexico’s Grupo Idesa, SA de CV announced it has extended the early tender date and expiration date of its exchange offer and consent solicitation for its 7 7/8% senior notes due 2020 (Cusips: 40053LAA3, P4954WAA8).

The early tender date and expiration date are now 5 p.m. ET on May 15, extended from 5 p.m. ET on May 8.

The early tender date and expiration date were previously extended to coincide on 5 p.m. ET on May 1 from April 10 and April 17, respectively. The early tender date was originally April 3.

As of 5 p.m. ET on May 8, holders had tendered 193,491,000, or 64.5%, of the notes, according to a Monday press release.

Grupo Idesa had launched on March 23 an offer to exchange any and all of its $300 million outstanding 7 7/8% notes due 2020 for up to $303 million of new 9 3/8% secured notes due 2026.

As previously reported, Grupo Idesa is also soliciting consents from the holders of the outstanding notes to amend or waive provisions of the indentures governing the notes. The company is seeking to eliminate most restrictive covenants, some affirmative covenants and some events of default and modify some conditions on acceleration and rescissions of acceleration applicable to the existing notes.

The offer and solicitation are conditioned on the company receiving tenders of at least 95% of the outstanding principal amount of existing notes.

All holders tendering by the new expiration date will be eligible to receive the total consideration of $1,010 principal amount of new notes per $1,000 of existing notes tendered. The total consideration includes an early tender consideration of $50 of new notes for each $1,000 of existing notes.

The company said it will also pay accrued interest on the existing notes through and including the settlement date in cash.

The new notes will be guaranteed by subsidiaries Alveg Distribucion Quimica, SA de CV, Excellence Sea & Land Logistics, SA de CV, Industrias Derivados del Etileno, SA de CV, Inmobiliaria Idesa, SA de CV, Sintesis Organicas, SA de CV and Novidesa, SA de CV.

In addition to offering an increased interest rate as compared to the existing notes, the new notes include various other enhancements and creditor protections, including the simultaneous refinancing of one of the company’s outstanding credit facilities and a cash sweep mechanism by which at least 80% of excess cash will be applied to redeem amounts outstanding under the new notes.

Collateral will consist of a first-priority lien on all shares and substantially all assets of the subsidiary guarantors, other than Novidesa and Excellence Sea & Land; a second-priority lien on the shares of Etileno XXI, SA de CV; and a contingent springing lien on the company’s shareholder loan to Braskem Idesa. The new notes will rank effectively senior in right of payment to all of the company’s existing and future unsecured debt, including the existing notes, to the extent of the collateral.

The company said it intends to apply to list the new notes on the Luxembourg Stock Exchange.

Notes tendered and consents delivered will be irrevocable.

A spokesperson for Grupo Idesa commented in a prior press release, “After several weeks of analysis and discussions with key stakeholders, we are moving forward with a refinancing plan that will significantly improve the credit profile of the company and provide creditors with at least full payment through new refinanced debt that has improved terms ... and a viable amortization schedule. This plan has been carefully crafted to provide equitable treatment to all creditors.

“We are living in difficult and volatile times around the world, but the company is confident that the proposed transaction will provide additional certainty to all of Idesa’s stakeholders. Our main challenge has been the mismatch between the expected cash flows from our primary investment (Braskem Idesa) and the maturities under our debt.

“Therefore, time is needed in order to capture the value of our investment. Furthermore, based on what we have heard in our discussions with our investors and given today’s uncertain economic outlook, there is substantial value to be gained by expeditiously consummating a deal, and reducing the risk that the transaction, and the company, are left to current market turmoil,” the spokesperson said.

“Finally, a major lender representing approximately 40% of our total debt, has already committed to refinance its debt, subject to certain conditions. This support, as well as the positive feedback received from various stakeholders, will help our company achieve a successful overall refinancing,” the spokesperson concluded.

Global Bondholder Services Corp. (212 430-3774 for banks and brokers, 866 470-3700, contact@gbsc-usa.com) is the exchange and information agent for the Rule 144A and Regulation S offering and solicitation.

The chemical company is based in Mexico City.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.