Mexcat gets early tenders for $4.25 billion of four series, consents for 71.31% of notes

By Susanna Moon

Chicago, Dec. 20 – Mexico City Airport Trust said it received early tenders for $4,247,714,000 principal amount, or 70.80%, of four series of notes and $4,278,836,000 principal amount, or 71.31%, of consents as of 5 p.m. ET on Dec. 19.

The issuer is giving details of the early tender results after saying on Dec. 19 that it had received tenders and consent from holders of a “substantial majority” of the notes.

The revised early tender and consent deadlines and withdrawal deadline expired at 5 p.m. ET on Dec. 19.

Because the offers have been oversubscribed as of the early deadline, the notes have been accepted for purchase using a proration factor, according to a company update on Thursday.

Under the revised terms, Mexcat will purchase up to $1.8 billion principal amount of notes and up to a pro rata principal amount of each series of notes, at par plus interest. The original tender offers used a reverse Dutch auction mechanism to determine the prices, within a range that was capped at par.

The breakdown for the early tenders are as follows, with the amount accepted for purchase and the consents given:

• $637,997,000 of the $1 billion 4Ľ% senior secured notes due 2026 (offer capped at $300 million), with $299.99 million accepted for purchase using a proration factor of 0.50319999 and consents for $649,947,000, or 64.99%;

• $602,012,000 of the $1 billion 3 7/8% senior secured notes due 2028 (offer capped at $300 million), with $300 million accepted for purchase using a proration factor of 0.51223800 and consents for $606,093,000, or 60.61%;

• $753,424,000 of the $1 billion 5˝% senior secured notes due 2046 (offer capped at $300 million), with $300 million accepted for purchase using a proration factor of 0.410338 and consents for $755,619,000, or 75.56%; and

• $2,254,281,000 of the $3 billion 5˝% senior secured notes due 2047 (offer capped at $900 million), with $899,996,000 accepted for purchase using a proration factor of 0.41025641 and consents for $2,267,177,000, or 75.57%.

Revised terms

The Ministry of Finance and Public Credit issued a statement on Dec. 17 about the revised terms of the tender offers and consent solicitations after facing headwinds from a group of noteholders.

“The revised offer was made after considering feedback received from a wide variety of market participants, and it includes significant enhancements in the interests of noteholders,” according to the statement.

Mexcat said it has also been in contact with advisors to an ad hoc group of holders, “who have declined, despite repeated requests, to provide the identities or holdings of the group.”

“The points advanced by those advisors have been reviewed with them and considered. However, we believe the revised offer addresses the principal concerns of the noteholders,” the release said.

Mexcat does not plan to amend the terms any further, the release noted.

Ad hoc group opposition

As reported, the group of noteholders said it had “some concerns” over the tender offer, which included the following:

• In connection with the new airport, the release and removal of collateral and events of default under relevant documentation;

• In connection with the existing airport, the potential for reductions in collateral upon the utilization or development of alternate or additional Mexico City area airports, whether in the near term or longer term;

• Further potential reduction in collateral with respect to the liberalization of the restricted payments test in two of the four bond series; and

• Tendering bondholders are deemed to consent to the collateral releases and covenant and event of default changes even though all tendered bonds may not be purchased in full, and even if tendered bonds are purchased, the early tender and consent fees are included in, and not in addition to, the minimum acceptable bid price.

Amended tender offer terms

Mexcat announced the tender offer for $6 billion of four series of notes on Dec. 3.

Along with the tender offers, the issuer is soliciting consents to amend the note indentures to reflect policy changes for the plan to develop a proposed new airport to serve Mexico City and the surrounding areas, according to a previous announcement.

The issuer then said on Dec. 11 that it was amending the offers in response to noteholders and other interested parties.

The revised offers also increased the consent payment to $10 per $1,000 principal amount of notes, which will be payable both to noteholders who tender their notes and noteholders who deliver their consents to the proposed amendments but do not tender their notes. The consent fee will be included in the early tender payment for those noteholders who tender their notes. Originally, the issuer offered a consent payment of $7.50 per $1,000 of notes.

One of the new proposed amendments added an event of default that will be triggered if either commercial operations have commenced at an alternative airport within a 70-kilometer radius of the Benito Juárez International Airport or commercial operations have expanded at the existing Toluca airport to at least five million passengers per year and Mexcat's debt service coverage ratio is below a specified level.

Amendments also included a provision to further protect bondholders against reductions in the rates of passenger charges collected at the Benito Juárez International Airport.

A third amendment established a mechanism to segregate funds every quarter for the repayment of principal on the notes at maturity, as well as to fund repurchases of notes in the open market, through tender offers or otherwise, and to pledge those funds as additional security for the notes.

A fourth amendment significantly limits Mexcat's ability to incur new debt.

The early tender and consent deadlines and withdrawal deadline were extended to 5 p.m. ET on Dec. 19 from 5 p.m. ET on Dec. 17. The offers were extended to 11:59 p.m. ET on Jan. 4 from 11:59 p.m. ET on Jan. 2.

Citigroup Global Markets Inc. (800 558-3745 or 212 723-6106), HSBC Securities (USA) Inc. (888 HSBC-4LM or 212 525-5552) and J.P. Morgan Securities LLC (866 846-2874 or 212 834-7316) are the dealer managers. Global Bondholder Services Corp. (212 430-3774 or 866 470-4500) is the depositary and information agent.

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