Chile’s Automotores Gildemeister inks notes restructuring agreement

By Caroline Salls

Pittsburgh, Nov. 24 – Automotores Gildemeister SA reached an agreement in principle with an informal group of holders of more than 70% of the principal amount of its existing notes to restructuring the terms of the notes, according to a news release.

The company said the noteholders’ group represents more than two-thirds of the principal amount of its 8¼% senior notes due 2021 and more than two-thirds of the principal amount of its 6¾% senior notes due 2023.

The agreement, which is subject to the negotiation of definitive documentation, calls for the exchange of the existing notes for a combination of new senior secured notes that will be secured by liens on real estate and other assets, new preferred stock and warrants to acquire a total of 40% of the company’s common stock.

The company said it will issue $425 million of the new notes, plus an amount equal to 60.7% of the accrued interest on the existing unsecured notes as of the issue date.

The new notes will mature on May 23, 2021, provided that the maturity date will be May 23, 2022 if at least 97% of the holders of the existing 2021 notes accept the exchange offer and solicitation.

Interest will accrue at 7½%. However, for the first two years, the company will have the option to either pay interest in cash at that rate or pay capitalized interest at a rate of 10%. Interest will be payable in cash after two years.

Automotores Gildemeister said it will issue 275,000 shares of preferred stock at a price of $1,000 per share, plus an additional number of shares resulting in a total price equal to 39.3% of the unpaid interest on the existing unsecured notes.

The preferred shares will be redeemable at par plus an amount equal to the lower of 7% compounded quarterly from the issuance date through the redemption date and Libor plus 500 basis points compounded quarterly over the same period.

Meanwhile, the company said the warrants will be exercisable, in whole or in part, at any time before the 10-year anniversary of the issuance date. The exercise price will be $0.01 per share.

Automotores Gildemeister said it believes that the transaction will enhance its ability to maintain access to sources of liquidity and improve its capacity to address the macroeconomic challenges in its primary markets of Chile and Peru while providing substantial value to bondholders and other stakeholders.

“With this agreement, the company expects to continue operating in its primary markets and meeting its obligations to its customers, employees, suppliers and other creditors,” the company said in the release.

Consistent with the agreement in principle, Automotores Gildemeister said it did not make the interest payment due Tuesday on the notes and has entered into a forbearance agreement with the informal noteholders group.

Under the forbearance agreement, the informal group will not exercise any default-related remedies until Dec. 7.

The company and the noteholders have agreed to negotiate definitive restructuring documentation during the forbearance period.

Automotores Gildemeister is an auto distributor based in Santiago, Chile.

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