WOM amends, extends tender offer for Kenbourne notes, sweetens deal

By Mary-Katherine Stinson

Lexington, Ky., Oct. 4 – WOM SA amended and restated its cash tender offer and consent solicitation to eligible holders of Kenbourne Invest SA’s outstanding 6 7/8% senior notes due 2024 (Cusips: L5831KAA4, 48855KAA8) and 4.7% senior notes due 2028 (Cusips: L5831KAC0, 48855KAC4) to extend the deadline for a fifth time, to increase the early tender payment and to modify some of the original proposals, according to a press release Tuesday.

Early tender payment

The company is now offering to pay par for the 2024 notes. This includes an early tender payment of $35, a consent fee of $12.50 and a tender offer consideration of $862.50. Previously, the company offered $995 per $1,000 principal for the 2024 notes including an early tender payment of $30 and a consent fee of $12.50.

The total consideration now offered for the 2028 notes is $840 per 1,000 of principal. This includes an early tender payment of $37.50, a consent fee of $17.50 and a tender consideration of $786. Previously, the company offered $832.50 per 1,000 of principal including an early tender payment of $30 and a consent fee of $17.50.

The early tender payments and the tender offer considerations are subject to proration. The consent payment is not subject to any proration.

Extended deadlines

The early deadline has now been extended to 5 p.m. ET on Oct. 13.

Previously, the tender instructions had been irrevocable. However, now the withdrawal deadline has been set at 5 p.m. ET on Oct. 11.

Noteholders have the option of only delivering their consent to the proposed amendments in which case they are only eligible to receive the consent payment. Tendering noteholders are deemed to have given consent to the proposed amendments.

Noteholders may only submit a consent only instruction prior to the early participation deadline.

The early tender payment will not be paid to noteholders who tender their notes after the early tender deadline and no consent payment will be made to noteholders who tender after the early participation deadline, unless they have submitted and not withdrawn a valid consent only instruction prior to the early participation deadline.

Early settlement will now be approximately Oct. 17.

The offer will now expire at 11:59 p.m. ET on Oct. 20 with final settlement on or about Oct. 24.

The offer has been repeatedly extended since its launch, with the original early deadline being Sept. 9. Previous extensions then lengthened the early deadline to Sept. 16, Sept. 23, which was the original expiration date, Sept. 28 and Oct. 4.

Amended and restated offer

The amended and restated proposals made the following changes to the initial proposals: addition of a waiver to permit the parent to apply the net asset sale proceeds from the towers sale to purchase notes below par up to $300 million, removal of all proposed changes to the issuer's accounting standards by removing the proposed changes to provide the issuer with the option to calculate the financial covenants and ratios on a pre-IFRS 16 basis or on a US GAAP basis, removal of the proposed changes to the asset sale covenant or the leverage-based permitted payment and removal of all initial changes to restricted payments of the indentures, and instead to provide for an additional restricted payments basket of $116 million.

The restated proposals reflect the terms of a support agreement which is an executed agreement between the issuer, offeror and a representative committee of holders representing 37.6% and 37.7% of the outstanding principal amount of each of the 2024 notes and 2028 notes, respectively.

The support agreement includes a commitment, subject to commercially reasonable and customary conditions, to deliver consents to the proposals of the amended and restated offers.

As of Oct. 3, consents had been delivered representing 26% of the 2024 notes and 17.8% of the 2028 notes from noteholders not represented in the committee.

The company stated the extension of the early participation deadline was to provide members of the committee and all other noteholders additional time to deliver their consents and tender their notes and to allow noteholders who have delivered a tender instruction or a consent only instruction a meaningful opportunity to withdraw them.

The consent solicitations need consents from noteholders representing more than half of the notes.

Background

As previously reported, the company launched the offer on Aug. 26 to purchase up to a total of $270 million face amount of the notes, with the idea of equally allocating the maximum purchase amount between the two series. If one of the series is undersubscribed, either of the $135 million-per-series sublimits could potentially be adjusted to allow for the maximum purchase total across both notes.

The company is soliciting consents because it recently completed the sale of around 2,000 of its towers to Phoenix Tower International Chile SpA as a sale-leaseback transaction.

The new leases are considered a liability and would be considered debt for the purposes of the note indentures.

The company is additionally already contracted for similar sale-leaseback transactions for towers that are currently under construction.

Accordingly, the original proposed amendments in the consent solicitation adjusted the definition of consolidated EBITDA, consolidated net leverage and the related definitions to calculate them to essentially exclude the leases.

The proposed amendments would have also given the group flexibility to apply current and future asset sale proceeds to refinance existing debt at its prevailing market price.

The company was additionally proposing to reduce the threshold at which it may make any restricted payment from a consolidated net leverage ratio of 3.7x to 3.5x.

The final original amendment proposal included the ability of the group to make a one-time election to apply US GAAP on a consistent bases rather than International Finance Reporting Standards.

As of 5 p.m. ET on Sept. 30, approximately $122.5 million aggregate principal amount of the 2024 notes, or approximately 24% of the notes currently outstanding, have been tendered. The amount of the 2028 notes tendered remains unchanged from the previous report, still totaling approximately $67.3 million, or approximately 15.5%.

D.F. King & Co., Inc. (212 269-5550, 866 388-7535, wom@dfking.com) is the tender and tabulation agent.

J.P. Morgan Securities LLC (866 846-2874, 212 834-7279) is acting as dealer manager and solicitation agent.

Kenbourne is an investment company based in Luxembourg and acts as a financing vehicle for WOM SA, a cell phone and mobile broadband company with headquarters in Santiago, Chile.

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