La Rioja begins consent bid to replace 9¾% notes due 2025 with step-up notes due 2028

By Rebecca Melvin

Concord, N.H., Sept. 1 – The Argentinean Province of La Rioja has commenced a consent solicitation from holders of its 9¾% notes due 2025 to replace the notes with step-up notes due 2028, according to a press release on Wednesday.

Bondholders representing about 63.7% of the $300 million principal amount of the notes outstanding have agreed to support the terms of the consent solicitation by providing their consents and withdrawal of claims seeking a judgment against the province filed on April 22 in the U.S. District Court for the Southern District of New York, the release stated.

The consent solicitation began on Aug. 31 and will expire at 5 p.m. ET on Sept. 21.

If there are consents of more than $225 million, or 75%, of the issue, the indenture will be changed to extend the maturity of the notes until Feb. 24, 2028, the amount of accrued interest payable will be raised from 3.5% initially to 8.5%, and the amortization schedule will be amended to nine semiannual installments as a percentage of the outstanding principal amount, including the aggregated pay-in-kind amount.

Specifically, the coupon schedule will be 3½% coupon from Aug. 24 to Feb. 24, 2022; 4¾% from Feb. 24, 2022 to Feb. 24, 2023, 6½% from Feb. 24, 2023 to Feb. 24, 2024 and 8½% from Feb. 24, 2024 to Feb. 24, 2028.

Under the amended amortization schedule, 5% of the principal amount will be payable on Feb. 24, 2024, and then the principal will be payable in 11.875% increments every six months.

The minimum denominations of the notes will be modified to $1,000 from $150,000.

By delivering a consent, holders agree not to accelerate the notes for reasons that may have occurred prior to the settlement date.

Consenting bondholders will receive a payment in kind of additional notes equal to their proportionate share for which consents were validly delivered of 42% of accrued interest.

The cash consent payment and PIK consent payment are due on the settlement date in respect of accrued and unpaid interest on the notes from Aug. 24, 2020 through and including Aug. 23.

The payment of the transaction expenses will be delivered to such account as Quinn Emanuel Urquhart & Sullivan, LLP, as counsel of certain bondholders supporting the consent solicitation, will notify to the province in writing prior to the settlement date.

BofA Securities Inc. is the solicitation agent of the consent bid, and D.F. King & Co. Inc. (212 269-5550, 866 751-6313) is the information and tabulation agent.

As previously reported, the changes were agreed in principle in August with an ad hoc group of bondholders represented by VR Advisory Services Ltd. and Sandglass Capital Advisors LLC and with GoldenTree Asset Management LP to support a proposal to amend the notes.

The ad hoc group and GoldenTree collectively hold around 63.7% of the notes, and the ad hoc group holds approximately 52.2% of the notes.

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