Argentina’s Cordoba amends consent solicitation for three series

By Taylor Fox

New York, Jan. 4 – The province of Cordoba in Argentina amended its consent solicitation regarding three series of notes to increase the rate payable in connection with the proposed modifications, change the amortization schedule and the maturity date for all eligible notes as well as set forth that 30% of the interest consideration to be received by holders who submit accepted consents will be paid in cash, according to an announcement.

The province also amended the expiration of the consent solicitations to 5p.m. ET Jan. 14 from 5 p.m. ET Jan. 29.

The province has received, after conversations, support for this consent solicitation from Schroder Investment Management North America Inc., which has agreed to consent to the proposed modifications with respect to each series of eligible notes on all its terms.

However, a group of ad hoc bondholders comprising institutional money managers holding blocking positions in each series of the province's international bonds covered by the solicitations opposes the amended solicitation, according to a separate news release.

The group holds over 50% of Cordoba's 7 1/8% notes due 2021, over 40% of its 7.45% notes due 2024 and over 30% of its 7 1/8% notes due 2027.

Schroder Management was formerly a member of the ad hoc group, but has now left the group.

The solicitation covers the $709,405,000 outstanding of the 7 1/8% notes due 2021 (ISINs: US74408DAC83, USP79171AD96), the $510 million outstanding of the 7.45% notes due 2024 (ISINs: US74408DAD66, USP79171AE79) and the $450 million outstanding of the 7 1/8% notes due 2027 (ISINs: US74408DAE40, USP79171AF45).

“The re-amended solicitation is a unilateral proposal from the province and is not the product of good-faith negotiations with bondholders,” the ad hoc group’s statement charges. “It does not reflect the fundamental solvency of the province nor its true medium-term payment capacity. As such, the terms proposed in the re-amended solicitation would impose unnecessary and unjustified losses on bondholders. It would also create lasting damage to the reputation and credit standing of the province.”

The purpose of the consent solicitations, which began on Nov. 6, is to achieve a sustainable debt profile for Cordoba, the province has said.

Requisite consents for all series of notes must be received in order for the proposed modifications to take effect for any single series of notes.

As reported on Dec. 14, the terms and conditions of the consent solicitation were previously amended to:

• Increase the interest rate payable and include an additional step-up rate period in connection with the proposed modifications to each series, as well as change the amortization schedule and the maturity date for the 2026 notes;

• Increase the reduced interest consideration to be received by holders who do not submit consents but whose eligible notes are modified and substituted for modified notes under the consent solicitations; and

• Specify that by submitting consents, holders irrevocably waive any current default or event of default in connection with the province's failure to pay interest under the eligible notes, any interest, late interest or additional interest, expenses or costs arising from or in connection with such default or event of default.

Modified 2021 terms

The province is seeking to modify the terms of the 2021 notes in several ways.

First, the province wants to change the interest rate to 2¾% from the settlement date to Sept. 10, 2021, stepping up to 4¼% through Sept. 10, 2022 and then to 5¾% to the maturity date. The current interest rate is 7 1/8%.

It wants to shift the maturity date to March 10, 2026 from June 10, 2021.

Interest payments would be shifted to quarterly payments from semiannual payments starting on March 10.

Amortization would shift to quarterly installments starting Sept. 10, 2023 from a bullet amortization plan.

Modified 2024 terms

The province wishes to modify the terms on the 2024 notes.

The province wants to change the interest rate to 2¾% from the settlement date to Sept. 1, 2021, stepping up to 4¼% through Sept. 1, 2022 and then to 5¾% through the maturity date. The current interest rate is 7.45%.

It wants to shift the maturity date to Sept. 1, 2028 from Sept. 1, 2024.

Interest payments would be shifted to quarterly payments from semiannual payments starting March 1, 2021.

Amortization would shift to quarterly installments starting Sept. 1, 2026 from a bullet amortization plan.

Modified 2027 terms

The province is asking for consent to modify the terms on the 2027 notes in a few ways.

The province wants to change the interest rate to 2¾% from the settlement date to Aug. 1, 2021, stepping up to 4¼% through Aug. 1, 2022 and then to 5¾% through the maturity date. The current interest rate is 7 1/8%.

It wants to shift the maturity date to Feb. 1, 2030 from Aug. 1, 2027.

Interest payments would be shifted to quarterly payments from semiannual payments starting Feb. 1, 2021.

Amortization would shift to quarterly installments starting Aug. 1, 2027 from a bullet amortization plan.

Details

HSBC Securities (USA) Inc. (888 HSBC-4LM, 212 525-5552) and J.P. Morgan Securities LLC (866 846-2874, 212 834-7279) are the consent solicitation agents.

D.F. King & Co., Inc. (cordoba@dfking.com, 212 269-5550, 866 342-4884, www.dfking.com/cordoba) is the information and tabulation agent.

Argentina’s Cordoba province is where the country’s second most populous city is located.

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