Argentina’s Cordoba gets consents to modify three series of notes

By Taylor Fox

New York, Jan. 26 – The province of Cordoba in Argentina received the necessary consents on its solicitation regarding three series of notes, according to a news release.

As of the 5 p.m. ET Jan. 22 expiration, 95.77% of outstanding notes due 2021, 96.99% of outstanding notes due 2024 and 96.32% of outstanding notes due 2027 were accepted as consents.

As a result of the consents, after payment of the cash consideration, the province intends to issue aggregated payment-in-kind of $12,154,779 of the 2025 notes, $5,936,748 of the 2027 notes and $6,004,929 of the 2029 notes, in each case, to be delivered as consideration for the applicable eligible notes under the consent solicitation statement.

As previously reported, the province amended the consent solicitation four times.

The fourth amendment to the terms and conditions further increased the interest rate payable in connection with the modifications to each series, smooth the amortization payments in respect of the 2025 notes, bring forward the amortization schedule and the maturity date for the amended 2027 notes and the 2029 notes and set forth that 60% of the accrued interest consideration to be received by holders who submit valid and accepted consents under the consent solicitations shall be paid in cash.

The province also amended the expiration of the consent solicitations to 5 p.m. ET on Jan. 22 from 5 p.m. ET on Jan. 14.

The good faith negotiations between the province and the bondholders group concluded with members of the group agreeing to provide their consents under the revised solicitation.

The province said it believes those consents along with those already received as of Jan. 11 and prior commitments from other investors will be sufficient to complete the restructuring of each series of notes.

In its third amendment, Cordoba increased the rate payable in connection with the proposed modifications, changed 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.

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

However, the group of ad hoc bondholders comprising institutional money managers held blocking positions in each series of the province's international bonds covered by the solicitations and opposed the previous amended solicitations.

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.

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 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.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.