Mexico's Vitro extends tender, exchange offers for three note series

By Angela McDaniels

Tacoma, Wash., Nov. 23 - Vitro, SAB de CV extended the tender offer, 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 to 5 p.m. ET on Dec. 7 from Dec. 1.

Vitro and subsidiary Administracion de Inmuebles Vitro, SA de CV are offering to purchase the notes for cash. Vitro is offering to exchange the notes and soliciting consents to an in-court restructuring under Mexican Bankruptcy Law, according to a T-3 filing with the Securities and Exchange Commission.

Vitro said it extended the expiration time at the request of market participants, in spite of having the required majority to implement the restructuring plan, to facilitate participation in the consent solicitation transactions.

Following the expiration time, Vitro plans to initiate its pre-packed insolvency process in Mexico.

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

Vitro responds

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

As previously 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 new 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 Tuesday's news release, Vitro said that only four bondholders representing $75 million, or 6% of the outstanding bonds to be restructured, signed the bankruptcy petition.

"No other bondholders have stepped forward to initiate litigation against Vitro notwithstanding the unsubstantiated statements made by the advisers to these dissident bondholders in an effort to influence creditor participation and manipulate the market in Vitro's securities," Vitro said in its news release.

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 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.

Tender offer

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

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

Holders will not receive any payment for accrued interest.

The notes may be subject to proration.

Because the size of the tender offer is limited, holders who tender must specify whether they elect to tender their notes into the exchange offer if they are not accepted in the tender offer.

The tender offer is 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 from Fintech Investments Ltd. Any notes accepted in the tender offer will be delivered to Fintech as payment for the loan. Fintech will be able to tender these notes in the exchange offer.

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.

The company noted that it may proceed with the plan even if it does not receive consents.

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.

The depositary for the tender offer and the information and exchange agent for the exchange offer is 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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