Province of Cordoba Ad Hoc Bondholder Group Rejects Terms of Province's Amended Consent Solicitation
NEW YORK, Dec. 4, 2020 /PRNewswire/ -- The Ad Hoc Bondholder Group (the "Group") of the Province of Cordoba (the "Province") firmly rejects the terms of the Province's amended Consent Solicitation announced by the Province on December 3, 2020. The Group is composed of institutional money managers holding in excess of 50% of the Province's international bonds subject to the Consent Solicitation.
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 annexed below.
The Group remains prepared to work constructively with the Province to develop a consensual adjustment to the Province's debt structure. However, the Group firmly believes that a consensual debt restructuring can only take place on the basis of principles of transparency and good faith, with a focus on the short-term liquidity challenges of the Province and a recognition of the Province's fundamental solvency and true medium-term payment capacity. Furthermore, the Province must be prepared to allocate a reasonable portion of its fiscal capacity to debt service and not seek, opportunistically, to rewrite the terms of existing contracts.
These important concepts are not reflected in the Province's amended restructuring terms. However, by honoring them in future restructuring negotiations with its bondholders, the Province will be able to avoid harming its well-deserved reputation as a responsible and reliable issuer in the international capital markets and preserve long-term market access. Such access has historically enabled funding of priority capital expenditures that have enhanced the productive capacity of the Province and the well-being of its residents.
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. |
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Exchange Consideration
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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. |
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New Bonds |
The New 2024 Bonds will be issued on, and bear interest from, the settlement date and:
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The New 2026 Bonds will be issued on, and bear interest from, the settlement date and:
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The New 2029 Bonds will be issued on, and bear interest from, the settlement date and:
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Treatment of Cash Interest during the Initial Coupon Period |
The Province of Cordoba shall have the option to pay interest of 3.5% in cash and 2.0% payment in kind ("PIK"), during the 2024 Initial Coupon Period, the 2026 Initial Coupon Period and/or the 2029 Initial Coupon Period for the respective New Bonds, with the appropriate notice mechanisms to be mutually agreed. |
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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. |
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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 Indebtedness1, 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. |
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Legal Documentation |
To be mutually agreed by the parties. |
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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. |
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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:
White & Case LLP
Erin Hershkowitz in New York
T +1 646 885 2200
E erin.hershkowitz@whitecase.com
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