Brazil’s USJ amends, extends exchange for 9 7/8% notes; plan sought

By Susanna Moon

Chicago, April 26 – Brazil’s USJ – Acucar e Alcool SA amended its private exchange in which it is offering newly issued 9 7/8%/12% senior secured pay-in-kind toggle notes due 2021 for its 9 7/8% senior notes due 2019.

Under the amended terms, the company also is seeking approval for an extrajudicial restructuring plan under a potential recuperacao extrajudicial proceeding under the provisions of Brazilian federal law, which subsequently may be submitted to a U.S. bankruptcy court under Chapter 15, according to a company notice.

In connection with that, the consent solicitation now includes a limited waiver of the bankruptcy event of default provision in the existing notes indenture, solely to permit the company to start proceedings before the bankruptcy courts for confirmation and implementation of the plan by Oct. 31, 2016.

If holders tender for exchange more than 90% of the notes and the offer is completed, they will now receive $750 principal amount of newly issued 9 7/8%/12% senior secured PIK notes due 2021 for each $1,000 principal amount.

The company also will pay accrued interest up to but excluding the settlement date.

If holders tender between 60% and 90% of the notes, and the company receives corporate approvals and bankruptcy court authorization of the plan, then holders will now receive $700 principal amount of new notes per $1,000 principal amount. In this case, holders will only receive the new notes after the plan is granted by the bankruptcy courts.

The exchange offer also was pushed back once more to 11:59 p.m. ET on May 6, extended from May 2 and, before that, April 18.

As of 5 p.m. ET on April 25, holders had tendered and given consents for $59,453,000 principal amount of the existing notes.

On April 12 the company extended the offer from its original expiration of 11:59 p.m. ET on April 11.

Holders had tendered $59,453,000 of notes by the April 18 deadline, up from $57,653,000 as of April 11.

When the offer was announced on March 15, the company said that holders who tendered their notes and delivered their consents before 5 p.m. ET on March 28, the early date, would receive $650 for each $1,000 principal amount of notes accepted for exchange. Those who tendered their notes for exchange after the early deadline would receive $600 per $1,000 principal amount.

The amount of new notes will be issued in minimum denominations of $200,000 and in integral multiples of $1,000 after that and will be rounded down to the nearest $1,000.

In addition to the exchange, the company is also soliciting consents to amend the notes to eliminate substantially all of the restrictive covenants and some events of default.

Holders who tender their notes for exchange must also deliver consents to the proposed amendments.

Tendered notes may not be withdrawn and consents may not be revoked after execution of the supplemental indenture containing the proposed amendments to the notes indenture.

The exchange offer is conditioned on the tenders of at least 90% of the outstanding notes. The offer and solicitation are also subject to the perfection of the mortgage on the collateral securing the new notes and the receipt of required waivers from some creditors to permit the company to issue the new notes and perfect the mortgage on the collateral securing the new notes, the release noted.

The exchange offer is being made, and the new notes offered, only in the United States to holders who are qualified institutional buyers under Rule 144A or outside the United States to holders who are not U.S. persons under Regulation S.

D.F. King & Co., Inc. (212 269-5550 or 877 283-0318) is the information agent and the exchange agent.

USJ is a Sao Paulo-based producer of sugar and ethanol.

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