Brazil's Braskem holders tender $707.1 million notes by early deadline

By Angela McDaniels

Tacoma, Wash., Jan. 30 - Braskem Finance Ltd., a subsidiary of Braskem SA, said HSBC Securities (USA) Inc. had received tenders for $707,126,000 of notes as of 5 p.m. ET on Jan. 30, which was the early tender date in tender offers that began Jan. 16.

Specifically, holders had tendered

• $44,927,000 principal amount, or 35.69%, of Braskem Finance's $130.22 million 8% notes due 2017;

• $229,413,000 principal amount, or 53.99%, of Braskem Finance's $500 million 7¼% notes due 2018; and

• $432,786,000 principal amount, or 57.90%, of Braskem Finance's $750 million 7% notes due 2020.

HSBC is tendering for any and all of the 8% notes and 7¼% notes. The amount of 7% notes it will purchase is limited to $500 million less the total consideration paid for the 8% notes and 7¼% notes, according to a press release from Braskem Finance.

The settlement date is expected to be Jan. 31 for notes tendered by the early tender date.

Because the offer for the 7% notes is oversubscribed, the amount of notes purchased on the early settlement date will be prorated. The proration factor is 29.82%. Accordingly, $165,684,000 principal amount of 7% notes will be settled on that date, and no additional tenders of 7% notes will be accepted.

The total purchase price for each $1,000 principal amount is $1,156.25 for the 8% notes, $1,155 for the 7¼% notes and $1,105 for the 7% notes. Each total purchase price includes an early tender payment of $50.00 per $1,000 of notes tendered by the early tender date.

The company also will pay accrued interest up to but excluding the applicable settlement date.

The tender offers will end at midnight ET on Feb. 13.

The offers are conditioned on the completion of financing, but they are not conditioned on the tender of any minimum principal amount of any series of notes.

Consent solicitations

The company also is soliciting the consents of the holders of the 7¼% notes and 7% notes to amend the notes to eliminate substantially all of the restrictive covenants and some events of default.

In order to amend a series of notes, the company must receive consents from holders of at least a majority of the outstanding notes of that series, excluding those held by Braskem.

Braskem or its affiliates hold $4,328,000 of 8% notes, $75,103,000 of 7¼% notes and $2.5 million of 7% notes.

By tendering their 7¼% notes or 7% notes, holders are providing consents.

Enough consents were received as of the early tender date to amend the 7¼% notes, so a supplemental indenture will be executed.

For the 7% notes, however, not enough consents were received. Because no more tenders will be accepted for the 7% notes, the indenture governing the notes will not be amended.

More offer details

The notes purchased by HSBC in the offers will subsequently be sold to Braskem Finance, which will finance the note purchases with the proceeds from a financing transaction.

Braskem priced $500 million of 10-year notes (Baa3/BBB-/BBB-) at par to yield 6.45%, or Treasuries plus 360.7 basis points, on Jan .16.

The dealer managers and solicitation agents are HSBC (888 HSBC-4LM or 212 525-5552), Banco Bradesco BBI SA (212 888-9145), Citigroup Global Markets Inc. (212 723-6106 or 800 558-3745), Credit Agricole Securities USA Inc. (866 807-6030) and Deutsche Bank Securities Inc. (866 627-0391 or 212 250-2955). Standard Chartered Bank is co-dealer manager.

The information agent is D.F. King & Co., Inc. (800 967-4604, 212 269-5550 or Braskem@dfking.com).

Braskem is a Sao Paulo, Brazil-based petrochemical company.

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