Chile's Inversiones Alsacia extends forbearance agreement for 8% notes

By Toni Weeks

San Luis Obispo, Calif., Aug. 22 – Inversiones Alsacia SA and Express de Santiago Uno SA agreed to extend a forbearance agreement entered into on Aug. 18 for another seven days.

According to a press release, the agreement was made with an informal group of holders that collectively holds more than 60% of the principal amount of the company’s 8% senior secured notes due 2018.

The extension will allow the parties to complete the negotiation and documentation of the agreement in principle on a new payment schedule that the company reached with the informal group as well as the related restructuring documents.

The investors had initially agreed on Aug. 18 that it would not declare a default for four days after the company missed a $39.6 million bond payment and announced it would file a Chapter 11 debt restructuring plan. The company said it needed the money to pay suppliers and employees.

According to an Aug. 19 press release, Alsacia’s ability to pay dwindled after the Chilean government imposed a new contract in 2012, ridership fell, and more passengers cheated on fares.

Consent solicitation

As previously reported, the company is soliciting consents from its counterparties to two foreign-currency hedge agreements relating to the notes.

Alsacia is seeking a waiver of any default, event of default, early amortization event and covenants relating to the failure to maintain a debt service coverage ratio of 1.1 times and the failure to fund the O&M account in the amounts required under the note indenture dated Feb. 18, 2011, as supplemented, according to a press release.

The consent payment will be $2.50 for each $1,000 principal amount of notes or in the value of the notes hedge agreements. Holders and notes hedge counterparties must be of record as of 5 p.m. ET on Aug. 19.

The proposed waivers require consents of holders and notes hedge counterparties holding more than 50% of the outstanding notes and notes hedge agreement value.

The solicitation was extended to 5 p.m. ET on Sept. 12 from Sept. 3 to give noteholders time to consider amendments made to the company's concession agreement with the Chilean Ministry of Transportation and Telecommunications.

The company said that as a result of the concession amendments, it will receive an increase in the payment per passenger of 22 Chilean pesos, a roughly 4% increase over current levels.

BofA Merrill Lynch is the solicitation agent. Global Bondholder Services Corp. (attn: corporate actions, at 866 470-4300 or 212 430-3774) is the information and tabulation agent.

Alsacia is a transportation company based in Santiago, Chile. It began soliciting consents on Aug. 20.

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