Cap Cana Offers Bondholders New Security

Cap Cana, the high end Dominican real estate development, is offering some investors the chance to exit its 2013 9.625% notes, of which there is some $250m outstanding. The company and its financial advisor, New York based Weston Group, will today offer holders the opportunity to cash out of the security at 35 cents on the dollar. The notes were trading around 28 cents Tuesday, according to Weston. In the offer to repurchase the notes, Cap Cana says that it, a third party investor and the Weston Group, all three of whom are collectively offering to repurchase the notes, will accept a minimum of $50m in tendered notes and a maximum of $100m. The repurchase rate is 33.4 cents plus accrued interest, which adds up to 35.0 cents. “We want to cash out whoever needs to get out,” says John Liegey, CEO of the Weston Group. “If [investors] want to stay in the security, we would be ecstatic,” he adds. Cap Cana and Weston will later this week unveil a new security in exchange for the existing 2013s that has a 7-year maturity and a 10% coupon with 1.35% over-collateralization, says Liegey. The existing notes carry a collateralization of 1.25%, he adds. Holders of the new note would end up with an IRR of up to 12.00%, claims the advisor. Weston says its primary concern in this deal is the company’s bondholders and it wants to win their favor so as to be able to come back to the market in the future. “This company will not default on its bonds,” says Liegey. Cap Cana last month says it offered 6 lenders the opportunity to extend a $100m 1-year bridge but they instead chose a haircut of 40 cents, according to company officials.