MetroGas begins new consent solicitation; debt holders can choose cash or exchange option

By Caroline Salls

Pittsburgh, Nov. 10 - MetroGas SA has begun a new solicitation of consents to restructure its debt under its acuerdo preventivo extrajudicial, a restructuring agreement or a combination of the two, according to a company news release.

The solicitation ends at 5 p.m. ET on Dec. 12.

The offer will be made to the holders of MetroGas' 9 7/8% series A notes due 2003, 7 3/8% series B notes due 2002 and series C floating-rate notes due 2004 and the holders of its existing bank debt.

The APE solicitation is subject to various conditions, including the approval of liquidation agent JPMorgan Chase Bank and receipt of powers of attorney from and execution of support agreements by holders of at least 66 2/3% of the debt.

Holders can choose either a cash option or an exchange option.

Under the cash option, holders will receive cash at the rate of $750 per $1,000 of debt.

The Buenos Aires company will only buy up to the equivalent of $160 million principal amount under the cash option. Any excess will be reallocated pro rata to the exchange option.

Under the exchange option, holders can exchange their debt for 8% dollar-denominated series 1 notes due Dec. 31, 2014 at an amount of 100% of their debt or for 3% series 2 notes due Dec. 31, 2014, which can be dollar-, euro- or peso-denominated, at an amount of 105% of the debt.

The 3% notes will step up to 8% after eight years.

The agent is JPMorgan Chase Bank (212 623-5136 or 212 623-6216) for international investors and JPMorgan Chase Bank, Sucursal Buenos Aires (4348-3475/4325-8046) in Argentina.

The old solicitation was announced in November 2003 and was extended multiple times since then, with the most recent expiration date being Nov. 14.

Under the old consent solicitation, MetroGas was seeking the receipt of powers of attorney from and execution of support agreements by holders of at least 85% of the principal amount of its existing debt, who could choose either a cash option or a "modification" option.

Under the cash option, holders would have received cash at the rate of $0.50 per $1.00 or €0.50 per €1.00 or Ps. 0.50 per Ps. 1.00, depending on the currency in which the debt is denominated, up to $100 million.

Also under the cash option, MetroGas would have paid accrued interest at the rate of 2.5% from the date the APE is filed with the reviewing court to the settlement date.

Under the modification option, the principal amount of the existing debt would have been increased to reflect capitalized interest at the rate of 2.5% from the date at which interest was last paid up to the settlement date. MetroGas would have then repaid principal on the modified debt in installments over nine years following settlement.

The modified debt would have paid interest at 3% for the first two years, 4% for the third and fourth years, 5% for the fifth and sixth years and 6% to maturity.

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