Buenos Aires ad hoc bondholders group not part of restructuring agreement

By Wendy Van Sickle

Columbus, Ohio, July 22 – The Province of Buenos Aires announced Wednesday that it has reached an agreement regarding its debt restructuring with some bondholders, but the agreement is not endorsed by an ad hoc group of the province’s bondholders, according to a statement released by the group’s counsel, White & Case LLP, on Thursday.

As reported, the province announced in a Wednesday news release that an agreement was reached with some institutional investors, including GoldenTree Asset Management as the largest holder of eligible bonds, according to a press release.

“The province chose an unfortunate path towards launching its offer, which involved bilateral discussions with certain, selected bondholders. The province declined on multiple occasions to engage in direct negotiations with the AHG (ad hoc group), notwithstanding its repeated invitations to the AHG to enter into non-disclosure arrangements meant to facilitate dialogue. This pattern of behavior does not constitute a ‘good-faith’ approach under any broadly understood meaning of the word,” the ad hoc group said in its release.

“The province's efforts to restructure in the absence of reaching agreement with a broadly representative group of its bondholders is contrary to the approach of the nine other Argentine provinces which have previously reached successful restructuring agreements. Those provinces presented proposals that were fully endorsed by their creditor committees and which subsequently received strong support in the financial markets.”

The group said it is considering reaching out to a broader group of holders of the bonds.

Background

An exchange offer for existing notes started April 24, 2020 and has been subject to regular extensions since the offer’s launch.

In light of the progress made with other bondholders, the expiration time has been extended again to 5 p.m. ET on Aug. 13 from 5 p.m. ET on July 23, as reported previously.

Results would be announced on Aug. 16 and the execution date, effective date and settlement date are scheduled for Aug. 20.

New bonds

The agreement would provide that all eligible bondholders, excluding 2035 dollar and euro bonds, that tender and provide consents would receive new 2037A bonds, denominated in either dollars or euros.

Holders of 2035 bonds would be entitled to receive 2037B bonds in either dollars or euros.

All of the new bonds would begin to accrue interest starting June 30.

All coupons would be payable semiannually.

Details of the new dollar 2037A bonds are the following:

• The coupon would start at 2½% for the remainder of 2021, step up to 3.9% in 2022, 5¼% in 2023, 6 3/8% in 2024 and then would be 6 5/8% onwards;

• The notes would mature Sept. 22, 2037; and

• There would be 28 semiannual amortization payments starting March 22, 2024.

Details of the new dollar 2037B bonds are the following:

• The coupon would start at 2½% for the second half of 2021, step up to 3½% for 2022, 4½% for 2023, 5½% for 2024 and then would be 5 7/8% from 2025 onwards;

• The notes would mature Sept. 22, 2037; and

• There would be 19 semiannual payments starting Sept. 22, 2028.

For the euro 2037A notes:

• The coupon would be 1½% for the rest of 2021, step up to 2.85% in 2022, 4% in 2023, 4½% in 2024 and then would be 5 1/8% after that date;

• The notes would mature Sept. 22, 2037; and

• There would be 28 semiannual payments starting March 22, 2024.

For the euro 2037B notes:

• The coupon would start at 1½% for what is left of 2021, move up to 2½% in 2022, 3½% in 2023, 4½% in 2024 and would be 5 1/8% going forward;

• The notes would mature Sept. 22, 2037; and

• There would be 19 semiannual payments starting Sept. 22, 2028.

Other agreements

All consenting holders will receive all of the accrued interest on their existing bonds through June 30, paid 10% in cash and 90% in new bonds. Holders who do not validly tender and consent will lose the interest. And, if the requisite majority is obtained to modify all of the series, consenting holders will receive a pro rata allocation of the interest that would have been paid, but was not, to non-consenting holders for that series.

The bondholders have sought a strengthened effectiveness of the contractual framework for the new bonds. The agreement is subject to such adjustments.

Additionally, expenses incurred by the supporting creditors in connection with the transaction will be covered solely out of bondholder entitlements to be paid upon settlement of the revised invitation, subject to the dismissal of legal proceedings initiated by the supporting creditors, as will be set forth in the final documentation.

Managers, agents

BofA Securities, Inc. (888 292-0070 or 646 855-8988) and Citigroup Global Markets Inc. (800 558-3745 or 212 723-6106) are dealer managers for the offer.

D.F. King & Co. (PBA@dfkingltd.com; +44 20 7920 9700 or 212 232-3233; or https://sites.dfkingltd.com/PBA) is the exchange, tabulation and information agent.

© 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.