Province of Cordoba Ad Hoc Bondholder Group Rejects Terms of Province's Consent Solicitation

Province of Cordoba Ad Hoc Bondholder Group Rejects Terms of Province's Consent Solicitation

PR Newswire

NEW YORK and LONDON, Nov. 9, 2020

NEW YORK and LONDON, Nov. 9, 2020 /PRNewswire/ -- The Ad Hoc Bondholder Group (the "Group") of the Province of Cordoba (the "Province") firmly rejects the proposed bond exchange contained in the Consent Solicitation announced by the Province on November 6. The Group is composed of institutional money managers holding in excess of 50% of the Province's international bonds subject to the Consent Solicitation. 

While sensitive to the pandemic-related challenges the Province is facing, the Group does not believe the terms proposed in the Consent Solicitation reflect the true payment capacity of the Province. The Group is disappointed that the Province has chosen to announce restructuring terms that were not the product of constructive, good faith negotiations between the parties. 

The Group notes that the Province has benefited from decades of support from the international capital markets and has to date enjoyed a strong reputation for financial discipline and sound debt management.  The Province's unblemished international debt repayment history should facilitate renewed market access in the event that it reaches a consensual restructuring agreement with its bondholders.

The Group held discussions over the past week with the Province under a non-disclosure agreement, which led to a restructuring proposal by the Group that is provided as an Annex to this statement.  The Group remains committed to working constructively with the Province to identify a mutually agreeable solution to the current situation, and urges the Province to return to good faith discussions.  This is the only path that will lead to a proposal capable of commanding the support of the Province's international bondholders.

ANNEX: Ad Hoc Bondholder Group Proposal to the Province of Cordoba

RESTRUCTURING OF CERTAIN INTERNATIONAL BONDS OF THE PROVINCE OF CORDOBA

This term sheet sets out the key commercial terms upon which the Province of Cordoba Ad Hoc Bondholder Group (the "Group") is willing, in principle, to restructure certain international bonds issued by the Province of Cordoba (the "Transaction").  This term sheet is not exhaustive, does not constitute or imply a commitment by the Group to a restructuring transaction nor is it intended to constitute a legally binding agreement between the Province of Cordoba and the Group.  The completion of the Transaction is subject, among other things, to execution of definitive documentation and satisfaction of customary closing conditions, in each case in a form to be mutually agreed

 

Transaction

 

The Transaction will affect the Province of Cordoba's U.S. $725,000,000 7.125% Notes due 2021, with an outstanding aggregate principal amount of U.S. $709,405,000, $510,000,000 7.450% Notes due 2024 and U.S. $450,000,000 7.125% Notes due 2027 (the "Existing Bonds").

 

Holders of the Existing Bonds will be invited to exchange their Existing Bonds for new bonds with terms that will be substantially identical to those of the Existing Bonds except for the modifications that are set out below (the "New Bonds"). The holders of Existing Bonds due 2021 will receive the New Bonds maturing in 2024; the holders of Existing Bonds due 2024 will receive the New Bonds maturing in 2026; and the holders of Existing Bonds due 2027 will receive the New Bonds maturing in 2029.

 

Exchange Consideration

Holders of Existing Bonds who participate in the Transaction will receive U.S.$1,000 in principal amount of the New Bonds of the applicable series for each U.S. $1,000 in principal amount of Existing Bonds.

New Bonds

The New 2024 Bonds will be issued on, and bear interest from, the settlement date and:

·  Mature on June 10, 2024

·  Bear interest at a rate of 5.0% until June 10, 2022 and 7.125% thereafter, per annum, payable quarterly in arrears commencing [December 10, 2020]

·  Repay principal in 13 equal quarterly installments  commencing June 10, 2021

The New 2026 Bonds will be issued on, and bear interest from, the settlement date and:

·  Mature on December 1, 2026

·  Bear interest at a rate of 5.0% until September 1, 2022 and 7.450% thereafter, per annum, payable quarterly in arrears commencing March 1, 2021

·  Repay principal in 10 equal quarterly installments commencing September 1, 2024

The New 2029 Bonds will be issued on, and bear interest from, the settlement date and:

·  Mature on February 1, 2029

·  Bear interest at a rate of 5.0% until August 1, 2022 and 7.125% thereafter, per annum, payable quarterly in arrears commencing February 1, 2021

·  Repay principal in 9 equal quarterly installments commencing February 1, 2027

Treatment of Cash Interest

The Group is open to the allocation of a portion of the scheduled coupons on the New Bonds to payment in kind ("PIK") treatment, to be mutually agreed.

Treatment of Accrued Interest

Any and all accrued and unpaid interest on the Existing Bonds as at the settlement date will be paid in full in cash on the settlement date. 

Additional Provisions to be included in the New Notes

To the extent that from the settlement date through June 10, 2024, the Province of Cordoba issues Public External Indebtedness[1], such Public External Indebtedness shall (i) have neither (A) a maturity date nor (B) an initial amortization date, falling prior to the latest maturity date of the New Bonds, or (ii) provide that the Province of Cordoba undertakes to apply 100% of the net proceeds of such Public External Public Indebtedness to redeem the New Bonds at par on a pro rata basis, provided that for each series of New Bonds such proceeds shall be applied to the outstanding installments of principal of such New Bonds in the inverse order of maturity.

To the extent that after June 10, 2024, the Province of Cordoba issues Public External Indebtedness, such Public External Indebtedness shall (i) have neither (A) a maturity date nor (B) an initial amortization date, falling prior to the latest maturity date of the New Bonds, or (ii) provide that the Province of Cordoba undertakes to apply 50% of the net proceeds of such Public External Public Indebtedness to redeem the New Bonds at par on a pro rata basis, provided that for each series of New Bonds such proceeds shall be applied to the outstanding installments of principal of such New Bonds in the inverse order of maturity.

In the event that during 2021 and 2022 (the "Reduced Interest Period") the Province of Cordoba issues public debt denominated in foreign currency (the "Market Rate Notes"), commencing as of the next full interest payment period during the Reduced Interest Period and through the end of such Reduced Interest Period, each series of New Bonds would step up to the coupon rate of the Market Rate Notes.

Legal Documentation

To be mutually agreed by the parties.

Advisor Fees

Province of Cordoba to pay the reasonable fees of the Group's legal and financial advisers, White & Case LLP and BroadSpan Capital LLC, at settlement.


 


[1] To be defined in the final documentation substantially based on the existing indentures, provided that clause (iii) of the definition of "Public External Indebtedness" shall be removed (i.e., the requirement that the debt be intended to be quoted, listed or traded on any stock exchange, automated trading system or over-the-counter securities market).  

 

CONTACT: Miriam Low, miriam.low@whitecase.com, +44 20 7532 1562

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