Cap Cana solicits consents for 9 5/8% notes following Weston offer

By Jennifer Chiou

New York, Dec. 19 - Cap Cana, SA announced the start of a consent solicitation for its $250 million 9 5/8% senior secured notes due 2013.

The company is seeking consents from holders of a majority of the notes to amend the note indenture to provide Cap Cana with sufficient time to prepare its exchange offer intended for January by extending the deadline under the terms of the notes.

The amendments also include a provision under which Cap Cana must deposit funds sufficient to make interest and principal payments on the notes as they come due from Jan. 2 to Feb. 2.

Cap Cana is also seeking a waiver of an event of default that would arise if the extension is not approved.

The solicitation is set to end at 3 p.m. ET on Dec. 30.

On Dec. 17, Weston Funding LLC offered to purchase up to $100 million of Cap Cana's 9 5/8% notes, expecting to pay $334 per $1,000 principal amount of notes plus accrued interest up to but excluding the settlement date.

As already noted, the deeply discounted offer will expire at 1 p.m. ET on Dec. 24 and comes ahead of an exchange offer being planned by Cap Cana that would give noteholders at least $1,000 of new notes for each note exchanged.

According to a prior news release, Weston has been informed by Cap Cana's management that the board of directors is evaluating structures for the exchange offer and that the offer would be executed in early January.

Noteholders would be given an option to exchange their notes for two new series of notes with different characteristics. One of the series would be newly issued senior secured notes backed by a higher quality package of collateral partially substituting the existing collateral that currently secures the notes with coverage levels that would exceed the current levels.

The second series would be a separate series of liquidating trust certificates maturing in four to four-and-a-quarter years representing an undivided interest in some real estate assets owned by Cap Cana. The assets contributed to the liquidating trust would be managed and sold by a third party. The proceeds from sales of those assets would then be used primarily to pay down the outstanding principal amount of the liquidating trust certificates.

The exchange offer would be equally divided between the new notes and liquidating trust certificates. The new notes would be issued on a par-for-par basis, and the liquidating trust certificates would be issued on a ratio of 1.333 to 1.000 of principal amount of notes exchanged.

As for Weston's offer, the company said that if more than $100 million of notes are tendered, it may choose to purchase more than $100 million of notes or to not purchase any notes.

If Weston decides to purchase no more than $100 million of notes as originally planned, it will prorate the amount of notes accepted.

The offer is conditioned on Weston receiving tenders for at least $50 million of the notes.

Questions can be directed to Weston Funding at 212 888-4560.

Cap Cana is a Santo Domingo, Dominican Republic-based resort.

Weston Funding is a wholly owned subsidiary of Weston Group LLC, which is a New York-based investment banking firm. Cap Cana was advised by Weston Group when it extended its bridge loan in November and obtained a waiver of defaults.

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