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Brazil's Gerdau completes exchange offer for 7¼% and 7% bonds
By Jennifer Chiou
New York, May 9 - Gerdau SA announced the close of its exchange offer for the $1.5 billion of 7¼% bonds due 2017 issued by wholly owned subsidiary GTL Trade Finance, Inc. and the $1.25 billion of outstanding 7% bonds due 2020 issued by wholly owned subsidiary Gerdau Holdings Inc.
As reported, there is a concurrent cash tender offer for the bonds.
The offer ended at 11:59 p.m. ET on May 8, and the early tender and early exchange deadline was 5 p.m. ET on April 24.
Under the exchange offer, the two existing bond issues will be exchanged for up to $1.25 billion of new 10-year bonds jointly issued by GTL and Gerdau Holdings. The new Rule 144A and Regulation S bonds will be guaranteed by Gerdau SA, Gerdau Acominas SA, Gerdau Acos Longos SA and Gerdau Acos Especiais SA.
All in all, holders tendered for exchange $410,753,000 principal amount of the 7¼% bonds and $611,397,000 principal amount of the 7% bonds.
At the early exchange deadline, holders had tendered for exchange $381,159,000 principal amount of the 7¼% bonds and $582,149,000 principal amount of the 7% bonds.
The new bonds will bear interest at a rate of 5.893% per year.
For each $1,000 principal amount of existing bonds tendered, the exchange consideration is $1,153.07 of new bonds for the 7¼% bonds and $1,132.23 of new bonds for the 7% bonds.
The exchange price for the two series was calculated using the 2.75% Treasury due February 2024. The fixed spread was negative 8 basis points for the 7¼% bonds and plus 167 bps for the 7% bonds.
Based on the exchange ratios and including the new bonds already issued on the early participation settlement date, the issuers said that they expect to issue $1,165,629,000 aggregate principal amount of new bonds under the exchange offer.
D.F. King & Co., Inc. is the exchange agent, tender agent and information agent (800 207-3158 or gerdau@dfking.com).
Gerdau is a steel producer based in Porto Alegre, Brazil.
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