Tierra del Fuego extends early consent deadline for 8.95% notes

Chicago, Nov. 13 – Argentina’s Province of Tierra del Fuego announced an extension to the early deadline for its consent solicitation relating to its 8.95% secured amortizing notes due 2027 (Cusips: 886516AC7, P91528AA0), according to a press release.

The early consent deadline was originally scheduled for 5 p.m. ET on Nov. 9. It has been extended to the final deadline, at 5 p.m. ET on Nov. 27.

As of the original deadline, about 60% of holders participated by delivering consents.

The province needs consents from holders representing at least 75% of the outstanding notes.

The original principal amount was $200 million. The current principal amount, with amortization, is $98 million.

Recap

Previously reported, the rationale for the consent solicitation is to change the terms of the notes to align with new Argentine Central Bank regulations, established in June.

Under the proposed amendments, the province is seeking to postpone the maturity date until Jan. 21, 2030. Second, the amendments would modify the interest payment dates on the notes to Jan. 21, July 21 and Oct. 21 of each year.

Further, the amortization schedule would be modified so that $3.92 million of principal amount would be paid in each installment from April 21, 2025 to April 21, 2026, $4.9 million would be paid in each installment from April 21, 2026 to April 21, 2028 and $5.39 million installments would be paid from April 21, 2028 until the maturity date.

There would also be rate step-ups based on the occurrence of certain events related to the royalties coverage amount. If that amount is less than 1.05x, then the rate will be 8.95% and the step-up rate will not apply. If it is between 1.05x and 1.35x, then the rate will be 9.95%, increased by 1%. If the royalties coverage amount is equal to or greater than 1.35x after an interest rate step-up date, then the interest rate will be reset from the interest period immediately following the interest rate reset date to the original 8.95% rate.

If the royalties coverage amount is less than 1.05x, it will constitute a trigger event, a replacement of an earlier definition, per the amendment.

No event of default will be declared if the royalties coverage amount goes greater than 1.05x.

There would be a modification so that the requirement for the reserve adequacy ratio to be always no less than the minimum reserve adequacy ratio will apply starting Jan. 1, 2025.

Reserves certificates would be due 90 days after the each of each fiscal year.

Any event of default and any FX limitation event would be waived as of the execution date.

With these modifications, the terms of the notes would provide the province with significant debt service relief, specifically through 2024 and 2025. The change in the amortization profile would smooth out principal repayment throughout the life of the amended notes.

Details

The consent consideration will come from a $6 million pool. Distributions will be made on a pro rata basis, with noteholders who consent by the early deadline receiving twice the amount of consent consideration as the holders who consent after the early deadline.

If all holders consent, noteholders will receive $30 per $1,000 original face value, equivalent to the present amount outstanding after amortization on the notes of $61.22 per $1,000 face value outstanding.

BCP Securities, Inc. (203 629-2186, jharper@bcpsecurities.com) and Puente Servicios de Inversion SA (507 202-7801, +54911 4329 0000, TDFconsent@puentenet.com) are the international consent solicitation agents and Puente Hnos. SA is the local consent solicitation agent in Argentina.

The province also has a website (https://roadshow.tierradelfuego.gob.ar/).

Contexto Investments is the financial adviser.

Morrow Sodali International LLC is the information and tabulation agent (203 609-4910, +44 20 4513 6933, terradelfuego@investor.morrowsodali.com, https://projects.morrowsodali.com/ terradelfuego).

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