Argentina’s Entre Rios gives details on proposed restructuring

By Taylor Fox

New York, Feb. 12 – Argentina’s Province of Entre Rios has reached an agreement with an ad hoc group of bondholders regarding some proposed amendments to the terms of its $500 million 8¾% notes due 2025, according to a press release.

Following approval by the required majority of the holders of the existing notes, the existing notes will either be exchanged for new notes or the existing notes will be amended.

Under the restructuring transaction, holders will receive $1,000 of new notes for each $1,000 of existing notes exchanged. That amount of new notes may be increased as a result of accrued interest on the existing notes being paid in kind.

The new notes issued will be due Aug. 8, 2028 and bear interest at 5% per year until Aug. 8, 2022, 5¾% until Feb. 8, 2023, 8.1% until Aug. 8, 2023 and 8¼% until maturity.

The new notes will amortize in 12 semiannual installments beginning on Feb. 8, 2023. The first two installments will be 5% each, stepping up to 9% for each of the remaining10 installments.

As for accrued interest on the existing notes, 60% of all outstanding interest that was payable on Aug. 8 and Feb. 8 will be paid in cash on the settlement date of the refinancing transaction, and the remaining 40% will be paid in kind in the form of new notes. The cash portion will be allocated pro rata to the consenting holders. Non-consenting holders will be paid the entire accrued and unpaid interest in kind.

As previously reported, the ad hoc group has aggregate holdings of 58% of the outstanding notes and comprises major institutional holders of the province’s external debt, including funds managed or advised by GML Capital LLP, GoldenTree Asset Management LP, Redwood Capital Management, LLC and VR Advisory Services Ltd.

The province and the bondholders’ group have agreed that the province will launch a consent solicitation for the notes to amend the indenture of the notes, and the group members will support the proposal.

If the consent solicitation is successful, the province will be granted significant debt service relief in the form of coupon reductions and maturity reprofiling.

Should the solicitation be successful, the province is expected to withdraw the claim filed on Jan. 4 by certain entities under the management of group members in the U.S. Court for the Southern District of New York seeking a judgment against the province.

The members of the ad hoc group are advised by White & Case LLP in the restructuring discussions with the province and by Quinn Emanuel Urquhart and Sullivan, LLP in connection with the legal claim in the New York court.

HSBC Securities (USA) Inc. will be the solicitation agent.

D.F. King will be the information and tabulation agent for the consent solicitation.

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