WOM details early results for Kenbourne notes, ups maximum amount

By Mary-Katherine Stinson

Lexington, Ky., Oct. 14 – WOM SA announced early results for its oversubscribed cash tender offer and consent solicitation to eligible holders of Kenbourne Invest SA’s $510 million outstanding 6 7/8% senior notes due 2024 (Cusips: L5831KAA4, 48855KAA8) and $435 million outstanding 4.7% senior notes due 2028 (Cusips: L5831KAC0, 48855KAC4 and also announced increases in the maximum acceptance amount and the 2024 notes sublimit, according to a press release Friday.

The 2024 notes sublimit increased to $150 million from $135 million and the maximum principal amount for the tender offers increased to $285 million from $270 million.

As of the early participation deadline of 5 p.m. ET on Oct. 13, $413,126,000 of the 2024 notes were tendered with $150 million accepted for purchase.

$335,467,000 of the 2028 notes were tendered with $135 million accepted for purchase.

The notes will be accepted on a pro rata basis. The 2024 notes will be prorated at a factor of approximately 37.9% and the 2028 notes will be prorated at approximately 42.9%.

Noteholders can no longer submit a consent only instruction.

In addition, as of the early participation deadline, noteholders of a majority of the notes delivered their consents to the proposals. The consent solicitations needed consents from noteholders representing more than half of the notes. The proposals will become operative upon settlement.

Noteholders who tendered by the early participation deadline will receive the early tender payment, the consent fee and the tender offer consideration.

Early settlement is planned for approximately Oct. 17.

The offer is set to expire at 11:59 p.m. ET on Oct. 20. Final settlement was slated for Oct. 24 but, as the offer is oversubscribed, no more notes will be accepted for purchase after the early deadline.

Early tender payment

As previously reported, the company was 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 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 consent payment is not subject to any proration.

Extended deadlines

The offer was repeatedly extended since its Aug. 26 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.

The withdrawal deadline was 5 p.m. ET on Oct. 11. Originally tenders were irrevocable.

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

Amended and restated offer

The offer was amended and restated on Oct. 4, making 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 reflected the terms of a support agreement which was 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 included 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 were delivered representing 26% of the 2024 notes and 17.8% of the 2028 notes from noteholders not represented in the committee.

The company stated they extended the early deadline 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.

Background

The company originally offered 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 was undersubscribed, either of the $135 million-per-series sublimits could have potentially been adjusted to allow for the maximum purchase total across both notes.

The company was 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.

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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