Independencia Proposes Restructuring

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.