Tierra del Fuego gets needed consents to amend 8.95% notes due 2027

By Marisa Wong

Los Angeles, Dec. 28 – Argentina’s Province of Tierra del Fuego obtained the required consents from holders of its 8.95% secured amortizing notes due 2027 (Cusips: 886516AC7, P91528AA0) to effect the proposed amendments under the consent solicitation dated Oct. 27, according to a press release late Friday.

As of 5 p.m. ET on Dec. 22, the expiration time, holders of 90.89% of the notes had delivered their consents to the proposed amendments.

The consent solicitation required consents from holders of 75% of the outstanding notes to be successful.

Holders who delivered consents will receive a pro rata portion of the $6 million consent consideration, equal to $33.005297 per $1,000 original face value consented, equivalent to $67.35774969 per $1,000 face value outstanding.

The original principal amount of the issue was $200 million. The current principal amount, with amortization, is $98 million.

Settlement is expected to be Dec. 28, when the proposed amendments will become effective and the consent consideration will be paid.

Recap

The rationale for the consent solicitation is to change the terms of the notes to align with new Argentine Central Bank regulations, established in June.

Under the proposed amendments, the province is seeking to postpone the maturity date until Jan. 21, 2030. Second, the amendments would modify the interest payment dates on the notes to Jan. 21, July 21 and Oct. 21 of each year.

Further, the amortization schedule would be modified so that $3.92 million of principal amount would be paid in each installment from April 21, 2025 to April 21, 2026, $4.9 million would be paid in each installment from April 21, 2026 to April 21, 2028, and $5.39 million installments would be paid from April 21, 2028 until the maturity date.

There would also be rate step-ups based on the occurrence of certain events related to the royalties coverage amount. If that amount is less than 1.05x, then the rate will be 8.95% and the step-up rate will not apply. If it is between 1.05x and 1.35x, then the rate will be 9.95%, increased by 1%. If the royalties coverage amount is equal to or greater than 1.35x after an interest rate step-up date, then the interest rate will be reset from the interest period immediately following the interest rate reset date to the original 8.95% rate.

If the royalties coverage amount is less than 1.05x, it will constitute a trigger event, a replacement of an earlier definition, per the amendment.

No event of default will be declared if the royalties coverage amount goes greater than 1.05x.

There would be a modification so that the requirement for the reserve adequacy ratio to be always no less than the minimum reserve adequacy ratio will apply starting Jan. 1, 2025.

Reserves certificates would be due 90 days after each fiscal year.

Any event of default and any FX limitation event would be waived as of the execution date.

With these modifications, the terms of the notes would provide the province with significant debt service relief, specifically through 2024 and 2025. The change in the amortization profile would smooth out principal repayment throughout the life of the amended notes.

Details

The expiration time had been previously extended from 5 p.m. ET on Dec. 11. The original deadline was 5 p.m. ET on Nov. 27.

There had also been an early consent deadline that was extended to the final deadline.

BCP Securities, Inc. (203 629-2186, jharper@bcpsecurities.com) and Puente Servicios de Inversion SA (507 202-7801, +54911 4329 0000, TDFconsent@puentenet.com) are the international consent solicitation agents, and Puente Hnos. SA is the local consent solicitation agent in Argentina.

The province also has a website (https://roadshow.tierradelfuego.gob.ar/).

Contexto Investments is the financial adviser.

Morrow Sodali International LLC is the information and tabulation agent (203 609-4910, +44 20 4513 6933, terradelfuego@investor.morrowsodali.com, https://projects.morrowsodali.com/ terradelfuego).

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