Mongolia launches tender, exchange offers for 2023 notes, 2024 notes

By Marisa Wong

Los Angeles, Jan. 9 – The government of Mongolia has begun tender and exchange offers for its $517.23 million outstanding 5 5/8% notes due 2023 (ISIN: USY6142NAB48, US60937LAB18) and $600 million outstanding 8¾% notes due 2024 (ISIN: USY6142NAA64, US60937LAA35), according to a notice.

Specifically, Mongolia is offering

• To purchase for cash any and all of the 2023 notes;

• To exchange the 2023 notes for new notes, subject to the maximum exchange acceptance amount;

• To exchange the 2024 notes for new notes, subject to the maximum exchange acceptance amount; and

• To purchase for cash up to a maximum tender acceptance amount of the 2024 notes.

New notes

The government announced it is concurrently conducting a separate offering of debt securities. The new notes to be issued under the exchange offers will be issued on the same terms and form a single series with the notes to be issued as part of the new notes issuance.

The tender and exchange offers are conditioned on pricing of the new debt securities, proceeds of which will be used to fund the offers.

Considerations

Mongolia is offering (i) $1,000 of cash, plus accrued interest, per $1,000 of notes under the tender offers and (ii) $1,000 of new notes multiplied by the relevant exchange ratio, plus accrued interest, under the exchange offers.

The exchange ratio, which will be calculated by dividing the exchange price – $1,000 per old note – by the issue price of the new notes, will be announced soon after pricing of the new notes.

Offer caps

The exchange offers are subject to a cap that will be announced soon after pricing of the new notes issuance.

If the amount of old notes tendered for exchange in the exchange offers exceeds the maximum exchange acceptance amount, the government intends to prioritize accepting 2023 notes tendered in the 2023 exchange offer over 2024 notes tendered in the 2024 exchange offer.

The government said it reserves the right to increase or decrease the cap on the exchange offers.

The cap for the 2024 tender offer will be an amount that results in the aggregate 2024 tender consideration equaling the aggregate gross proceeds of the new notes issuance, less accrued interest and any cash rounding amount under the exchange offers, plus the aggregate principal amount of 2023 notes accepted for exchange, minus $517.23 million (the amount of 2023 notes outstanding).

The government said it expects to announce the determination of the maximum 2024 tender acceptance amount as soon as practicable on or after the expiration date.

Because of the offer caps, old notes tendered under the 2023 exchange offer, 2024 exchange offer or 2024 tender offer may be subject to proration.

Details

The offers will expire at 5 p.m. ET on Jan. 13.

Results of the offers and the 2024 tender cap are expected to be announced as soon as Jan. 16.

Settlement will be as soon as Jan. 19.

The dealer managers for the offers are Credit Suisse (Hong Kong) Ltd. (+852 2101 6000; fax +852 2284 7184; list.liabilitymanagementasia @credit-suisse.com), J.P. Morgan Securities plc (+852 2800 8219, +852 2800 7632; liability_Management_HK@jpmorgan.com), MUFG Securities Asia Ltd. (+33 1 70 91 42 79, +852 2860 1678, liability.management@mufgsecurities.com), Hongkong and Shanghai Banking Corp. Ltd. (888 HSBC-4LM, +852 3941 0223, +44 20 7992 6237, 212 525-5552; liability.management@hsbcib.com).

Morrow Sodali Ltd. (+44 20 4513 6933, 203 609-4910, +852 2319 4130; mongolia@investor.morrowsodali.com; https://projects.morrowsodali.com/ mongolia) is the information, exchange and tender agent.

The purpose of the offers is to extend the maturity profile of a portion of Mongolia’s external debt. The government said it believes that the offers provide an opportunity for noteholders to gain liquidity with respect to the old notes that might not otherwise be available.

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