Independencia Creditors Acquiesce in Workout

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.