MEXICO CITY, March 23, 2020 – — Grupo IDESA, S.A. de C.V. (the “Company”) today announced the commencement of an exchange offer and consent solicitation (the “Offer and Solicitation”) for any and all of its outstanding 7.875% Senior Notes due 2020 (the “Existing Unsecured Notes”) held by Eligible Holders (as defined below) for up to US$303 million of 9.375% New Secured Notes due 2026 (the “New Secured Notes”) to be issued by the Company and accrued and unpaid interest on the Existing Unsecured Notes through and including the Settlement Date to be paid in cash.
A spokesperson for the Company commented as follows:
“After several weeks of analysis and discussions with key stakeholders, we are moving forward with a refinancing plan that will significantly improve the credit profile of the Company and provide creditors with at least full payment through new refinanced debt that has improved terms (the New Secured Notes will benefit from a solid collateral package, a higher coupon and other credit enhancements including a “cash sweep” feature) and a viable amortization schedule. This plan has been carefully crafted to provide equitable treatment to all creditors.
We are living in difficult and volatile times around the world, but the Company is confident that the proposed transaction will provide additional certainty to all of Idesa’s stakeholders. Our main challenge has been the mismatch between the expected cash flows from our primary investment (Braskem IDESA) and the maturities under our debt. Therefore, time is needed in order to capture the value of our investment. Furthermore, based on what we have heard in our discussions with our investors and given today’s uncertain economic outlook, there is substantial value to be gained by expeditiously consummating a deal, and reducing the risk that the transaction, and the Company, are left to current market turmoil.
Finally, a major lender representing approximately 40% of our total debt, has already committed to refinance its debt, subject to certain conditions. This support, as well as the positive feedback received from various stakeholders, will help our Company achieve a successful overall refinancing.”
Eligible Holders who validly tender their Existing Unsecured Notes on or prior to April 3, 2020 (the “Early Tender Date”) will receive US$1,010 principal amount of New Secured Notes in exchange for each US$1,000 principal amount of Existing Unsecured Notes tendered, (the “Total Exchange Consideration”), which includes early tender consideration of US$50 principal amount of New Secured Notes for each US$1,000 principal amount of Existing Unsecured Notes validly tendered (the “Early Tender Consideration”). Eligible Holders who tender their Existing Unsecured Notes after the Early Tender Date but before April 17, 2020 (as may be extended by the Company, the “Expiration Date”) will receive US$960 of New Secured Notes for each US$1,000 principal amount of Existing Unsecured Notes tendered (the “Base Exchange Consideration”).
The New Secured Notes will mature on the sixth anniversary of the settlement date for the Offer and Solicitation (the “Settlement Date”), and will bear interest from the Settlement Date as described in greater detail in the Offering Memorandum (as defined below). The New Secured Notes will be fully and unconditionally guaranteed by Alveg Distribución Química, S.A. de C.V.; Excellence Sea & Land Logistics, S.A. de C.V. (“Excellence Sea & Land”); Industrias Derivados del Etileno, S.A. de C.V.; Inmobiliaria Idesa, S.A. de C.V.; Síntesis Orgánicas, S.A. de C.V.; and Novidesa, S.A. de C.V. (“Novidesa”) (the “Subsidiary Guarantors”). In addition to offering an increased interest rate as compared to the Existing Unsecured Notes, the New Secured Notes include various additional enhancements and creditor protections, including the simultaneous refinancing of one of the Company’s outstanding credit facilities, a cash sweep mechanism by which at least 80% of the Company’s excess cash will be applied to redeem amounts outstanding under the New Secured Notes, and collateral consisting of: (i) a first-priority lien on all shares and substantially all assets (excluding accounts receivables) of the Subsidiary Guarantors, other than Novidesa and Excellence Sea & Land; (ii) a second-priority lien on the shares of Etileno XXI, S.A. de C.V. and (iii) a contingent springing lien on the Company’s shareholder loan to Braskem Idesa. The New Secured Notes will rank effectively senior in right of payment to all of our existing and future unsecured indebtedness, including the Existing Unsecured Notes, to the extent of the Collateral.
In addition, as part of the Offer and Solicitation, the Company is soliciting from the holders of the outstanding Existing Unsecured Notes consents (each a “Consent”) to amend or waive provisions (the “Proposed Amendments”) of the indentures governing the Existing Unsecured Notes (the “Solicitation”). The purpose of the Solicitation is to eliminate most restrictive covenants, some affirmative covenants, certain Events of Default and modify certain conditions on acceleration and rescissions of acceleration applicable to the Existing Unsecured Notes.
The Offer and Solicitation are being conducted upon the terms and subject to the conditions set forth in an Offering Memorandum, dated March 23, 2020 (the “Offering Memorandum”). Beneficial owners of Existing Unsecured Notes should carefully read the Offering Memorandum regarding the relevant procedures and timing to tender their Existing Unsecured Notes.
The New Secured Notes have not been, and will not be, registered under the Securities Act or any state securities laws. Therefore, unless so registered, the New Secured Notes may not be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws.
The Company intends to apply to list the New Secured Notes on the Official List of the Luxembourg Stock Exchange and for trading on the Euro MTF Market.
The Offer and Solicitation are only made, and copies of the offering documents will only be made available, to a holder of the Existing Unsecured Notes who has certified its status as (1) both a “Qualified Purchaser” for purposes of Section 3(c)(7) under the Investment Company Act of 1940 and a “qualified institutional buyer” as defined in Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”) or (2) a person who is not a “U.S. person” as defined in Rule 902(k) under the Securities Act who is not a “Disqualified Non-U.S. Holder” (each, an “Eligible Holder”).
The Offer and Solicitation are subject to certain conditions, including the requirement that the Company receive valid tenders of at least 95% of the aggregate outstanding principal amount of Existing Unsecured Notes.
The Offer and Solicitation will expire at 5:00 p.m., New York City time, on April 17, 2020, unless extended by the Company in its sole discretion. Existing Unsecured Notes tendered and consents delivered in the Offer and Solicitation will be irrevocable, except to the extent of any withdrawal rights required by applicable law.
As part of the Company’s discussions with its creditors to restructure its debt, the Company presented certain financial projections to certain holders of the Existing Unsecured Notes. The Company is disclosing this information here in accordance with its obligations under confidentiality agreements it entered into with those holders.
To view these projections and forecasts please visit: https://inversionistas.idesa.com.mx/storage/200320_Blow%20Out%20Projections%20Presentation.pdf
THIS PRESS RELEASE IS NOT AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITY. THE OFFER AND SOLICITATION ARE BEING MADE SOLELY BY THE OFFERING MEMORANDUM THAT MAY BE OBTAINED FROM THE EXCHANGE AND INFORMATION AGENT AND ONLY TO SUCH PERSONS AND IN SUCH JURISDICTIONS AS IS PERMITTED UNDER APPLICABLE LAW. ANY PUBLIC OFFERING OF SECURITIES TO BE MADE IN THE UNITED STATES WILL BE MADE BY MEANS OF A PROSPECTUS THAT MAY BE OBTAINED FROM THE COMPANY OR THE SELLING SECURITY HOLDER THAT WILL CONTAIN DETAILED INFORMATION ABOUT THE COMPANY AND MANAGEMENT, AS WELL AS FINANCIAL STATEMENTS.
The New Secured Notes and Guarantees have not been and will not be registered under the Securities Act of 1933, as amended (the “Securities Act”). The Offer and Solicitation are made, and the Total Exchange Consideration or the Base Exchange Consideration, as the case may be, are being offered in the United States only to U.S. Persons that are qualified purchasers (“Qualified Purchasers”) for purposes of Section 3(c)(7) under the Investment Company Act of 1940, as amended (the “1940 Act”) who are also qualified institutional buyers within the meaning of Rule 144A under the Securities Act (“Qualified Institutional Buyers”) and to non U.S. Persons as defined in Rule 902(K) under the Securities Act that are not a “Disqualified Non-U.S. Holder.” The New Secured Notes are also being offered outside the United States in compliance with Regulation S under the Securities Act (“Regulation S”). The Company, as issuer, has not been registered as an investment company under the 1940 Act.
Eligible Holders that wish to obtain additional information with respect to the Offer and Solicitation, including accessing the Offering Memorandum, please visit:
Exchange and Information Agent
Global Bondholder Services Corporation
65 Broadway, Suite 404
New York, NY 10006
212-430-3774 (Banks and Brokers)
866-470-3700 (toll free)
Attn: Corporate Actions
Rothschild & Co México, S.A. de C.V.
Managing Director and Co-Head
Phone: +52 (55) 5327 1450
Managing Director and Co-Head
Phone: +52 (55) 5327 1450
SOURCE Grupo IDESA, S.A. de C.V.