Transtelco begins cash offer for 8% Maxcom notes with solicitation

Chicago, Sept. 23 – Transtelco Holding, Inc. has started a tender offer for any-and-all of the $56,858,270 outstanding 8% senior secured notes due 2024 (Cusip: 57773AAM4) issued by Maxcom Telecomunicaciones SAB de CV, as announced in a press release.

Transtelco is also soliciting consents to the related indenture.

Noteholders are being offered a total consideration of $515 per $1,000 note, an amount that includes a $50 early tender premium.

To receive the early consideration, noteholders must tender their notes by 5 p.m. ET on Oct. 6.

Accrued and unpaid interest will not be paid. And, there will be no additional consent consideration.

The proposed amendments would, among other things, eliminate substantially all of the restrictive covenants, as well as various events of default and related provisions contained in the indenture.

A majority of noteholders must give consent for the supplemental indenture to be executed.

The offer and consent solicitation will expire at 11:59 p.m. ET on Oct. 21, also the withdrawal deadline.

The purpose of the offer is to purchase any and all of the notes in connection with the acquisition of Maxcom, a principal object of which is to help the issuer avoid a potential insolvency proceeding (Concurso Mercantil) governed by the Mexican Concursos Law (Ley de Concursos Mercantiles) in Mexico or a potential U.S. bankruptcy proceeding.

The acquisition is subject to the completion of the tender offer and the consent solicitation.

Maxcom does not have the means to repay the amounts that will become due and payable under the notes.

Additionally, Transtelco has no intention to make any scheduled payments of interest or principal on the notes not purchased in the offer.

Transtelco has entered into a support agreement on Sept. 23 with certain beneficial holders of notes representing approximately 56% of the total amount of notes outstanding, whereby the consenting noteholders agreed to tender their notes in the offer subject to the terms and conditions set forth in the offer to purchase.

The acquisition is expected to close on Oct. 26. Following completion of the acquisition, Maxcom will be an indirect subsidiary of Transtelco.

In addition, upon successful completion of the acquisition, which Transtelco acknowledges will result in a change of control requiring a mandatory redemption under the indenture governing the issuer's junior payment-in-kind notes, Transtelco acknowledges an equity value implied by the acquisition of $30.4 million and that the aggregate amount payable to holders of the junior PIK notes as a result of such mandatory redemption would be approximately $7.6 million based on such implied equity value (subject to currency exchange rate fluctuations).

Transtelco has agreed to fund the mandatory redemption obligation with respect to the junior PIK Notes simultaneously with the settlement of the Offer.

The offer is subject to a minimum condition whereby 90% principal amount of the notes need to be validly tendered and not validly withdrawn on or prior to the expiration date.

Funding for the offer will come from Transtelco’s credit facilities.

BCP Securities, LLC (203 629-2186) is the dealer manager.

D.F. King & Co., Inc is the information and tender agent for the offer (866 796-7184, 212 269-5550, maxcom@dfking.com).

Maxcom is an integrated telecommunication services operator based in Mexico City. Based in El Paso, Transtelco is a digital infrastructure solutions provider, which includes a long-haul and metropolitan fiber network in the Southwestern United States, Mexico and Latin America.

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