Brazil’s InterCement offers to swap 2024 notes for new 2027 notes

By Marisa Wong

Los Angeles, June 25 – InterCement Participacoes SA’s wholly owned subsidiary, InterCement Financial Operations BV, announced it has begun a private offer to exchange any and all of its 5¾% senior notes due 2024 for newly issued 7%/8½% senior secured PIK toggle notes due 2027.

The new notes will be issued by InterCement Financial and guaranteed by InterCement Participacoes and InterCement Brasil SA.

Concurrently with the exchange offer, the company is soliciting consents to some proposed amendments to the indenture governing the existing notes that would eliminate substantially all of the restrictive covenants and some events of default and related provisions.

A tender of existing notes under the exchange offer will also be considered a consent to the proposed amendments.

Holders who tender their notes and deliver their consents on or prior to 5 p.m. ET on July 8, the early expiration deadline, will receive $850 principal amount of new notes for each $1,000 principal amount of existing notes accepted for exchange.

Holders who tender their notes after the early deadline but on or prior to 11:59 p.m. ET on July 22, the expiration deadline, will receive $800 principal amount of new notes for each $1,000 principal amount of existing notes accepted for exchange.

In each case, holders will also receive accrued interest to but excluding the applicable settlement date, which will be added to the principal amount of the new notes.

The issuer said it expects to accept for exchange any notes tendered at or prior to the early expiration deadline on an early settlement date.

Tenders may not be withdrawn and consents may not be revoked once a supplemental indenture effecting the proposed changes is executed.

The exchange offer and consent solicitation are conditioned on the tender of at least 85% of the aggregate principal amount of the outstanding existing notes.

The new notes will mature on July 15, 2027. Interest will be payable (i) entirely in cash at a rate per annum of 7% or (ii) with respect to payments of interest due on any interest payment date that occurs on or prior to Jan. 15, 2022, by increasing the principal amount of the new notes outstanding or, with respect to new notes represented by certificated notes, issuing additional new notes for the remaining amount of the interest payment, at a rate per annum equal to 8½%.

The company said the main purpose of the exchange offer and consent solicitation is to gain flexibility to overcome the current economic downturn, to achieve its overall objectives and to improve its capital structure and liquidity position by extending the maturity profile of the existing notes.

Morgan Stanley & Co. LLC (800 624-1808 or 212 761-1057), BB Securities Ltd. (+44 20 7367 5800), Banco Bradesco BBI SA (347 703-8159) and Itau BBA USA Securities, Inc. (212 710-6781/6799) are dealer managers and solicitation agents for the Rule 144A and Regulation S exchange offer and consent solicitation.

D.F. King & Co., Inc. (212 269-5550 or 800 370-1749, www.dfking.com/intercement) is the information and exchange agent.

The construction materials company is based in Sao Paulo.

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