Brazil’s Marfrig cancels tender offer, consent solicitation for 9˝% notes, also skips note offering

By Toni Weeks

San Luis Obispo, Calif., Nov. 20 – Marfrig Overseas Ltd. announced it has decided to cancel the tender offer and consent solicitation for its $775 million of outstanding 9˝% senior notes due 2020 previously announced Nov. 14, according to a news release.

Marfrig Overseas said it had been in discussions with investors for a potential new offering of senior notes, whose proceeds would be exclusively used to finance the tender offer. The company said that although a solid book was built on Wednesday, price levels indicated by investors did not meet its original price target.

With an eye on its objective of reducing interest expense, the company has decided not to undertake the offering of senior notes, its funding source for the tender offer. As a result, the company said it is withdrawing the tender offer and consent solicitation.

In addition, Marfrig said it had already been making strides to meet its overall strategy to continue reducing interest expenses by conducting three liability management transactions in the last year. And its most recent new offering of senior notes priced below 7% and with a negative new issue premium of 78 basis points, the release said.

The company said that none of the notes that have already been tendered will be accepted for purchase, and no consideration will be paid to noteholders who tendered their notes. All notes previously tendered will be promptly returned or credited back to their respective holders. In addition, all consents previously delivered will be of no effect.

As previously reported, the company had been soliciting consents to eliminate substantially all of the restrictive covenants and certain events of default contained in the note indenture.

In the tender offer, the company had offered to pay per each $1,000 principal amount of notes a total consideration of $1,075, which included an early tender payment of $30.00 for those who tendered prior to 5 p.m. ET on Dec. 1. The company had also planned to pay accrued interest to the settlement date.

The offer deadline had been set for 11:59 p.m. ET on Dec. 12.

The information agent and tender agent was D.F. King & Co., Inc. (212 269-5550 for banks and brokers or 888 591-6309 for others; marfrig@dfking.com).

The dealer managers were BB Securities Ltd. (attn: operation department; 44 20 7367-5803; bbssettlements@bb.com.br), Banco Bradesco BBI SA (attn: fixed income division; 212 888-9145), Banco BTG Pactual SA - Cayman Branch (attn: Sandy Severino; 646 924-2535) and Santander Investment Securities Inc. (attn: liability management; 212 940-1442; conor.nugent@santander.us).

Marfrig is a food processing company based in Sao Paulo.

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