Category: Corporate & Sovereign Strategy

Mexican retailer Comercial Mexicana has launched a MXP1.5bn exchange offer to local bondholders, as part of its restructuring deal. Comerci is offering new 7-year floating-rate notes over TIIE, on a 1-for-1 basis, in exchange for 5 outstanding series of domestic bonds sold in 2008. It does not state the rate on the new notes. Comerci aims to restructure $1bn-$2bn in liabilities after racking up more than $1bn in derivatives losses last year. The offer, managed by Ixe, lasts 20 days.

Argentina’s Metrogas may be the next domestic to seek a debt restructuring, following fellow gas utility TGN. “If and when we default, the government would be intervening for sure in the same way they’ve intervened in TGN,” CEO Andres Cordero said in an earnings conference call Thursday. Metrogas has yet made no definitive plans to default, though it has been pushing regulators to raise frozen tariffs to be more in line with operating costs, and prevent its financial situation from deteriorating. Metrogas has $225m in debt outstanding. TGN missed an interest payment in December 2008, prompting the government to intervene in its management, and is offering its debt holders a $347m restructuring.

Argentine toll road operator Autopistas del Sol plans to restructure its debt, including a $9m interest payment due November 23. As of June 30, Ausol had about $307m in total debt, comprised of $152.5m notes with final maturity in 2014 and $155.0m due in 2017, according to S&P, which Tuesday chopped the credit to CC from CCC. The agency says it expects to lower the rating to D upon failure to meet the upcoming payment. Rising debt maturities, Argentine macroeconomics, rising costs, inflation, peso devaluation and lower traffic levels conspired against Ausol. It has also not had a tariff increase since 2001, though investors note such a rise would be unlikely to help it escape its current position. An investor eyeing the process says the government may see fit to support Autopistas in the restructuring. “I think the government will have to get involved,” he says, noting the sovereign is gearing up for its own contentious debt restructuring and may want to clear the path of any distraction. “For [the government] to let this company go would be a real stain on them, to say the least,” adds the investor. Another buysider off the deal, says the only way to fix Autopista’s problem is to have the government overhaul the toll road tariff system in the areas where Ausol operates, provide liquidity to meet obligations and extend the company’s main toll road concession to allow it a longer revenue stream. Barclays and Cleary Gottlieb are advising Ausol. The bondholders are heard not yet organized, though investors expect them to do so. Ausol’s 2014 and 2017 bonds were recently bid at 30 and 38, respectively, according to data from Credit Suisse. The company holds the concession to operate until 2020 the Autopistas del Sol Highway System, one of the most important access roads to the city of Buenos Aires. Spain’s Albertis controls 50% of the voting shares, with Dutch-based Impreglio International Infrastructures holding 24%.

Mexican homebuilder Desalloradora Metropolitana (Desmet) has scheduled a conference call for creditors at which it plans to unveil a proposed debt restructuring. The call will be held November 12 at 1100 EST. Among the obligations to be restructured are $260m in unsecured bonds, $200m of which are 10.75% of 2017 notes. Executives both on and off the deal expect a significant haircut. Among the leading investors is EM-focused hedge fund Tudor. Cleary Gottlieb is advising holders. Heritage Capital Latin America is advising Desmet, while Dewey & LeBoeuf is providing the company with legal advice.

Creditors of Brazilian meat giant Independencia have approved the company’s debt restructuring plan. The deal involves taking a 50% NPV loss on $525m worth of 9.875% coupon 2015 and 2017 bonds and exchange them for a new 12.000% PIK note due 2016. Some 70% of creditors holding the unsecured debt approved the deal, according to a company official. In a statement, Independencia also notes that 100% of the company’s worker creditors who are owed salary, and 98% of secured creditors approved the deal. Agencia Estado notes that following the publishing of the latest proposal on October 30, a clause was included that gives creditors a stake in the company worth 50% of what shareholders would receive in the event of a change of control. “While a 50% principal haircut is far from optimal, the equity component provides some upside in case of a sale,” says Barclays. “Independencia will come out of the process as a leveraged entity, but the PIK structure on the unsecured debt should help take some of the pressure off in the short term,” its adds, valuing existing Independencia bonds at 35. A July draft of the restructuring proposed converting 75% of outstanding debt into 8% coupon perpetual notes that would only pay principal in the event of change in control. Independencia is also expected to raise a DIP facility worth BRL330m, part of whose proceeds would go towards repaying supplier debt. Arsenal Consultoria advised Independencia.

Brazilian meatpacker Independencia has filed a new proposal for its debt restructuring, following weeks of back and forth with its various classes of creditors. The new document, made available Friday, is the latest in a series of proposals that began in July. For holders of dollar denominated bonds, of which there is $525m outstanding in 9.875% in 2015s and 2017s, the latest proposal involves a 50% NPV loss and an exchange for a new 2016 12.000% PIK note. Independencia would be required to pay at least 1% of the interest due on the notes in years 1 and 2, and have the option to capitalize the remainder of what it owes in interest through year 3. In year 4, its minimum interest payment requirement rises to 4%, and all accrued interest must be paid in full in year 7. For holders of BRL-denominated debt, of which the exact amount is not spelled out in the proposal, the same terms apply, including haircut and final maturity, but the interest rate on the new notes is 14.000%. An earlier proposal made in July suggested converting 75% of outstanding debt into 8% coupon perpetual notes that would only pay principal in the event of a change in control. Independencia is also expected to raise a DIP facility worth BRL330m, part of whose proceeds would go towards repaying supplier debt. Arsenal Consultoria is advising Independencia.