Mexico's Vitro wraps Dutch tender, further extends exchange offers

By Jennifer Chiou

New York, Dec. 8 - Vitro, SAB de CV announced the end of its tender offer concurrently with the extension of its exchange offer and consent solicitation for its $300 million of 8 5/8% senior notes due 2012, $216 million of 11¾% senior notes due 2013 and $700 million of 9 1/8% senior notes due 2017.

The Dutch auction tender had previously been extended to 5 p.m. ET on Dec. 7 from Dec. 1. Settlement is anticipated for Dec. 10.

The company recorded tenders for about $30 million total of the notes and has thus far obtained consents through the exchange/solicitation, together with consents via lock-up agreements, for roughly 32% of the notes.

The exchange offer will now end at 5 p.m. ET on Dec. 21, extended from Dec. 7, due to Vitro's continued discussions for potential lock-up agreements with at least two significant creditors.

The company also said it has the requisite majority of debt subject to lock-up agreements and consents received through the exchange offer and solicitation to accomplish a prearranged concurso mercantil. It plans to proceed with the concurso plan no later than Dec. 16.

In the tender offer, the company was offering to purchase the maximum principal amount of notes that it could for $100 million.

The purchase price is $575 per $1,000 principal amount and is the same for each note series. The price was determined through a modified Dutch auction. The acceptance bid price range was $500 to $575 per $1,000 principal amount of notes.

Holders will not receive any payment for accrued interest.

The tender offer was not conditioned on any minimum amount of notes being tendered.

The company expects to fund the tender offer with a loan to Administracion de Inmuebles Vitro, SA de CV from Fintech Investments Ltd. Notes accepted in the tender offer will be delivered to Fintech as payment for the loan, and Fintech will be able to tender these notes in the exchange offer.

As reported, Vitro and subsidiary Administracion de Inmuebles Vitro offered to purchase the notes for cash. Vitro is offering to exchange the notes and is soliciting consents to an in-court restructuring under Mexican Bankruptcy Law.

Holders could tender their notes either in the tender offer or in the exchange offer and consent solicitation.

Exchange offer, consent solicitation

Under the restructuring plan, the company is proposing to exchange all of the old notes, $239.8 million of claims relating to derivative financial instruments and the group's other debt - which total $1.52 billion - for the following on a pro rata basis:

• $850 million principal amount of new notes due 2019;

• $100 million principal amount of newly issued mandatory convertible debentures, which will mandatorily convert into 15% of Vitro's equity on a fully diluted basis if not paid in full at maturity or upon the occurrence of certain events of default;

• A cash payment in an amount equal to the unpaid portion of $75 million in cash held in a Mexican trust after the making of the consent payment; and

• A cash restructuring fee, which will based on the issue date of the new notes.

Accordingly, for every $1,000 principal amount of the restructured debt exchanged, holders will be entitled to receive:

• $561 principal amount of new 2019 notes;

• $66 principal amount of new convertibles;

• A pro rata portion of the restructuring cash payment; and

• A pro rata portion of the restructuring fee.

Holders who consent to the restructuring plan will receive a consent payment of 5% to 10% of par. Notwithstanding the extension of the expiration time, Vitro said that the payment trust will make a partial consent payment in an amount of 5% of the aggregate principal amount of old notes for which consents were validly provided. And, no later than Dec. 28, the trust will make an additional consent payment of 5%.

The new notes will carry an interest rate of 8%. The coupon will be payable entirely in cash or half in cash and half in kind through Dec. 31, 2013.

The principal of the new notes will be payable in semiannual installments of $12.5 million beginning June 30, 2015.

The new convertibles will carry a 10½% coupon, payable in kind.

The new notes and convertibles will be callable under certain circumstances. They will be mandatorily redeemed if their yield to maturity, based on the average closing trading prices of the new notes during the 20 business days immediately preceding the receipt of the proceeds from any issuance of capital stock is higher than 9%. In this case, the company must apply 25% of the cash proceeds from that stock issuance to either prepay or redeem the new notes and/or the remaining new convertibles at par or repurchase the new notes through market purchases.

Tenders in the tender offer and exchange offer are irrevocable.

Bondholder concerns

Vitro previously responded to statements made by bondholders that it said are misleading and "clearly aimed at disrupting Vitro's restructuring process."

As already reported, members of Vitro's informal noteholders group filed involuntary bankruptcy cases against 15 of the company's U.S. subsidiary guarantors on Nov. 18 in the U.S. Bankruptcy Court for the Northern District of Texas.

According to a prior release from the noteholder group, the involuntary bankruptcy petition filed against the Vitro subsidiaries is supported by the entire group, which represents more than $635 million principal amount of the parent company's senior notes.

In a subsequent news release, Vitro said that only four bondholders representing $75 million, or 6% of the outstanding bonds to be restructured, signed the bankruptcy petition.

The company has retained legal counsel and is analyzing the potential rights it may exercise in the United States against the ad hoc group.

Vitro also previously said that the bondholder group's allegations that bondholders who choose to participate in Vitro's offer will be worse off or would otherwise receive a lower recovery than those who do not participate are "blatantly misleading and false and contrary to the express terms of the restructuring offer."

According to the company, bondholders who do not participate in the restructuring offer will receive the same pro rata portion of the restructuring consideration once the restructuring plan is approved, but they will not receive the upfront cash consent fee offered in the consent solicitation.

The depositary for the tender offer and the information and exchange agent for the exchange offer was D.F. King & Co., Inc. (banks and brokers call 212 269-5550, others call 800 431-9633).

Vitro is a Nuevo Leon, Mexico-based glass manufacturer.

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