Bondholder group rejects Province of Neuquen’s consent solicitation for 2028 notes

By Rebecca Melvin

New York, Aug. 14 – An ad-hoc committee of secured bondholders of the Province of Neuquen said it rejects the province’s Aug. 10 consent solicitation for $338,231,240 8 5/8% secured notes due 2028.

The committee, which is comprised of institutional investors holding more than 25% of the series, said the secured notes have specialized terms and protections relative to the majority of public issuances. Specifically, the province assigned royalties to an Argentine Collateral Trust for the benefit of the secured notes. The assignment and financing structure insulated performance on the secured notes from the Province’s finances, or offered security in exchange for more attractive lending terms. Meanwhile, the royalties pledged to the Argentine Collateral Trust have and continue to be sufficient to service the current and future payments due under the notes, the committee said.

As a result, the committee objects to the offer and any attempt to reverse the negotiated protections.

Separately, the committee has reviewed the terms of the offer and believes that in addition to its punitive economic terms, the offer strips away secured noteholder protections including reserve accounts established for the benefit of holders and changing modification procedures to force secured noteholders to accept a potential non-consensual restatement of the notes’ terms at a later date.

The committee said it remains open to a transparent and timely dialogue with the province and its advisers but that it will not participate in the offer, which it calls unilateral, as it stands.

Holders may direct questions about their contractual rights attached to the notes to Chris Clark at Latham & Watkins LLP.

As previously reported, the province began a consent solicitation with regard to the 2028 notes and also its $366 million outstanding of the series 1 7½% notes due 2025 (ISINs: US64126BAC46, USP71695AC75), referred to as the Tideneu notes.

The province is seeking the consent of the lenders under its credit agreement dated Dec. 1, 2015 to amend certain terms of the credit agreement with Credit Suisse AG, London Branch as administration agent, similar to the relief sought through the amendments to the Ticade securities.

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