Category: Corporate & Sovereign Strategy

Brazilian meatpacker Independencia has proposed a restructuring plan that will split assets into 2 companies. A new company called Nova Independencia SA, or Nisa, would hold operational assets and about BRL1.1bn in debt – consisting of all of Independencia’s secured debt and 25% of its unsecured debt. Independencia SA would then hold 66% of Nisa, with BNDESpar and the founding Russo family controlling the rest. The remaining BRL2bn in unsecured debt would become perpetual debt at the holdco, payable upon asset sales or other “liquidity events.” The meatpacker would also seek BRL330m in loans from commercial banks, in order to continue to pay suppliers. While noting the proposal is only a first step in the negotiating process, Barclays estimates that such a deal would imply a recovery value for bondholders of 16-17. The 9.875% of 2015s and 9.875% of 2017 bonds were heard trading around 12.0-12.5 Tuesday.

Bogota-based multilateral FLAR has agreed to lend Ecuador $480m to help it cover its fiscal deficit for 2009, Ecuador’s Central bank says. Ecuador, which defaulted on its 2012 and 2030 bonds last year, will pay Libor plus 400bp on the 3-year loan that features a one-year grace period. The funds will be fully disbursed on Monday. The sovereign is seeking a total of $1.5bn from multilaterals to cover budget needs.

Brazilian meatpacker Independencia, which is undergoing a BRL3.5bn in-court restructuring, is set to unveil a proposal to creditors July 13. An executive close to the process says as far as its cross-border bonds are concerned, the proposal will not involve a haircut, but rather a rescheduling of payments to make them more manageable. The company has $525m in bonds outstanding across 2 classes: 9.875% 2015 bonds, and a 9.875% of 2017. In February, Independencia tried to buy back up to $145m of the bonds, but failed to reach the minimum participation to do so. It suspended operations and filed for judicial recovery in early March. Creditors have 30 days from July 13 to read over and approve the plan. They can also reject the proposal and propose a new one within 60 days. Arsenal Investimentos is advising Independencia, with Pinheiro Neto providing legal counsel. Bondholders have not formed an organized group.

Cemex has unveiled its long awaited restructuring proposal at meetings with lenders yesterday in New York and Madrid. Details on the new structure are being kept under tight wraps, but bank market participants say initial impressions are that it is a reasonable offer, albeit at pricing that is still below market. The proposal was heavily negotiated between the company and its lead banks over the past months. The main features involve an extension of maturities through one or more new facilities, and a commensurate increase in margins. One banker overseeing Cemex facilities with new tenors ranging from 5-7 years estimates updated pricing could stand at around 400bp over Libor. The proposal is far from ideal for creditors and it remains to be seen how smaller lenders, of which there are more than 50 in total, will respond. Market participants will also want an update on the loan restructuring, especially since Cemex said earlier this year that it had extended all of its H1 2009 maturities until June 30. After beginning its most recent round of restructuring discussions more than 3 months ago, Cemex has provided virtually no information. It is clear that it will need much more time to wrap up the restructuring, despite hopes from many investors for a H1 resolution. One executive involved in the process says it could take another month or more, assuming banks are generally in agreement with the proposal. Cemex will also file a 20-F form with the SEC today, detailing the major events and financials of the past year. That could also provide insights into the state of the company. Earlier this month, Cemex was able to divest some Australian assets to Holcim for $1.6bn, which was viewed as a debtor-friendly move by equity analysts. Cemex also obtained a MXP5bn working capital line from Banobras, along with other similar facilities from Nafin and Bancomext. Most of the funding it has accessed from the government has been backed by its assets. The leading Cemex lenders includ

Brazilian soybean grower Imcopa has reached an agreement with bondholders for a 120-day standstill, as it prepares a debt restructuring plan. Imcopa received 61.7% approval via a consent solicitation from holders of its $100m in 10.375% bonds due this year, which will also waive prior covenant breeches. Holders have also agreed to remove a negative pledge clause, an Imcopa official says, that will give the grower control over certain assets, allowing for more flexible negotiation with banks. Imcopa has some $400m in bilateral and syndicated loan debt with about 20 banks that it will also seek to restructure. The company aims to present a comprehensive restructuring plan within the next 120 days, the official says. Deloitte Touche Tohmatsu is advising Imcopa. HSBC managed the consent solicitation.