Argentina’s Neuquen extends consent solicitation for 8 5/8%, 7½% notes

Chicago, Sept. 21 – The Province of Neuquen announced that it is extending its consent solicitations for about $693.77 million of external bonds to 5 p.m. ET on Oct. 9 from 5 p.m. ET on Sept. 18.

The province continues to engage in discussions with external creditors to restore debt to sustainable levels, in light of current conditions and the expected long-lasting effects of the Covid-19 pandemic on both Argentina and the province, according to an announcement.

An ad hoc committee of secured bondholders previously announced a rejection of the consent solicitation for the 8 5/8% notes detailed below. The ad hoc group was comprised of investors holding more than 25% of the Ticade securities.

Consents may be revoked if they were validly delivered before the existing expiration time on Sept. 25.

The terms of the consent solicitations, according to the announcement, remain unchanged.

Review of the offer

As previously reported, the offer comprises the $327,770,480 outstanding of the series 1 8 5/8% secured notes due 2028 (ISINs: US64126BAC46, USP71695AC75), referred to as the Ticade securities. The amount was initially $338,231,240.

Also included are the $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.

8 5/8% Ticade securities

The province is seeking the following in relation the Ticade securities:

• To postpone the maturity date to May 12, 2030 from 2028;

• To waive the interest on the securities from Aug. 12 to the settlement date and reduce the interest rate to 1% from the settlement date to Nov. 12, 2021, to 4% from Nov. 12, 2021 to Feb. 12, 2023 and to 6Ύ% from Feb. 12, 2023 to the maturity date;

• To have the first interest payment date be Feb. 12, 2021;

• To allow the prepayment at par of $20 per $1,000 principal amount of notes outstanding on the settlement date;

• To modify the amortization schedule to 31 quarterly payments, calculated as the principal amount outstanding divided by the number of remaining principal installments from and including the principal date to the maturity date with the first principal installment on Nov. 12, 2022;

• To amend the cross-payment default and cross acceleration to exclude any default of event of default under the Tideneu notes unless modified under the Tideneu consent solicitation;

• To modify the debt service reserve account indenture to allow release on the settlement date of up to $10.97 million and the replenishment of the debt service reserve account to at least equal to the interest due on the next succeeding payment date from the settlement date to and including Feb. 12, 2022, between Feb. 12, 2022 and May 12, 2022 the balance should be the interest due on the next payment plus an amount equal to 33% of the amortization amount due on Nov. 12, 2022, between May 12, 2022 and Aug. 12, 2022 the balance should be the interest due on the next payment plus an amount equal to 66% of the amortization amount due on Nov. 12, 2022, between Aug. 12, 2022 and Nov. 12, 2022 the balance should be the interest due on the next payment plus an amount equal to 100% of the amortization amount due on Nov. 12, 2022 and after Nov. 12, 2022 the balance should be at least the interest due on the next payment date plus 100% of the amortization amount due on the next payment date after the date of determination;

• To replace all references to 8 5/8% secured notes due 2028 with secured senior step-up notes due 2030; and

• To waive any limitations would not allow for the proposed amendments.

7½% Tideneu notes

The province is seeking the following in relation the Tideneu securities:

• To move the maturity date to Oct. 27, 2030;

• To waive the right to receive 75% of the interest from April 27 to the settlement date;

• To waive the interest due on Oct. 27;

• To move the first interest payment date to April 27, 2021 after payment of interest on the settlement date;

• To reduce the interest rate to 1% from the settlement date to Oct. 27, 2021, to 4% from Oct. 27, 2021 to Oct. 27, 2022, to 5% from Oct. 27, 2022 to Oct. 27, 2023 and to 5Ύ% from Oct. 27, 2023 to the maturity date;

• To postpone the initial principal payment and modify the amortization schedule to 13 semiannual payments, calculated as the principal amount outstanding divided by the number of remaining principal installments from and including the principal date to the maturity date with the first principal installment on Oct. 27, 2024; and

• To amend the minimum denomination of the notes to $1.00 and replace all references to 7 ½% notes due 2025 to unsecured senior step-up notes due 2030.

Consent considerations

For noteholders of Ticade securities who validly deliver a consent to amend their notes, the province will pay in cash an amount equal to unpaid interest under the notes from Aug. 12 to the settlement date.

The funds will come from the dollar debt service reserve account and only if the proposed amendments are validly adopted.

For noteholders of the Tideneu notes who validly deliver a consent, they will receive 75% of the interest accrued and unpaid from April 27 to the settlement date which will be paid in kind, in additional Tideneu notes.

Additionally, consenting noteholders will receive 25% of the interest accrued from April 27 to the settlement date in cash.

Similarly, the consent consideration on the Tideneu notes will only be paid if the supplemental indenture to the notes is executed.

Details

Citigroup Global Markets Inc. is the consent solicitation agent (800 558-3745, 212 723-6106, ny.liabilitymanagement@citi.com).

Morrow Sodali is the information and tabulation agent (neuquen@investor.morrowsodali.com, Ticade securities consent website: https://bonds.morrowsodali.com/neuquenTICADE, Tideneu securities consent website: https://bonds.morrowsodali.com/neuquenTIDENEU, Hong Kong: +852 2158 8405, London: +44 20 7355 0628 and Stamford: 203 609-4910).

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