Brazil’s Odebrecht plans to start tender offer, consent solicitation for several notes series

By Toni Weeks

San Luis Obispo, Calif., June 19 – Construtora Norberto Odebrecht SA (CNO) affiliate Odebrecht Finance Ltd. plans to begin a tender offer and consent solicitation for several series of notes following the announcement of terms of an anticipated financing. Each series of notes is guaranteed by CNO.

Odebrecht Finance is offering to purchase any and all of its $82.9 million of 7% senior notes due 2020, $600 million of 5 1/8% notes due 2022 and $120.5 million of 6% notes due 2023.

The company is also offering to purchase some of its $518.6 million of 4 3/8% notes due 2025. That offer will be capped at an amount equal to $500 million less (i) the total aggregate consideration of the 5 1/8% notes and 6% notes, and less (ii) roughly $88.3 million (the approximate principal amount of outstanding 7% notes multiplied by the total consideration, excluding accrued interest, of the 7% notes tendered and accepted for purchase in the tender offer.

If the amount of 4 3/8% notes tendered exceeds the cap, the notes will be subject to proration.

The company is simultaneously soliciting consents for the 7%, 5 1/8% and 6% notes. Holders who tender will also be providing consents.

For each of the three series of notes, the company wants to adopt an amendment to the indentures governing the notes to amend the “substitution of issuer” provision to permit the issuer of the notes to be replaced and substituted as principal debtor by CNO, Odebrecht SA or any wholly owned subsidiary of those two companies.

For the 5 1/8% notes, the company would additionally like to adopt amendments to the indenture governing the notes to eliminate substantially all of the restrictive covenants and various events of default and related provisions.

Approval of each proposed amendment requires the consents of holders of a majority in principal amount of the applicable outstanding notes.

The total consideration per $1,000 principal amount of notes will be $1,065 for the 7% notes, $1,100 for the 5 1/8% notes and 6% notes and $985 for the 4 3/8% notes. Each amount includes an anticipated consent payment of $30.00.

CNO is an engineering and construction company based in Sao Paulo, Brazil.

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