Inkia Energy Limited Announces Commencement Of Consent Solicitation
LIMA, Peru, Sept. 5, 2014 /PRNewswire/ -- Inkia Energy Limited, an exempted company organized under the laws of Bermuda (the "Company"), announced today that it has commenced a solicitation (the "Solicitation") of consents (the "Consents") upon the terms and subject to the conditions set forth in a Notice of Consent Solicitation (as it may be amended or supplemented from time to time, the "Notice") and an accompanying Consent Form (as it may be amended or supplemented from time to time, the "Consent Form"), each dated as of September 5, 2014, to certain proposed amendments (the "Proposed Amendments") to the Indenture, dated as of April 4, 2011 (the "Indenture"), by and between the Company and Citibank, N.A., as trustee (the "Trustee"), governing the Company's 8.375% Senior Notes due 2021 (the "Notes").
The Proposed Amendments would amend the Indenture in connection with (i) the contribution (the "IC Spin-Off") by the Company's indirect parent company, Israel Corporation Ltd. ("IC"), of certain of its businesses and associated companies (including the Company) to Kenon Holdings Ltd. ("Kenon") and (ii) the sale (the "Acter Disposition") by the Company of all of its equity interests in Inkia Holdings (Acter) Limited ("Acter"), which indirectly holds all of the Company's equity interest in Edegel S.A.A., a Peruvian corporation listed on the Lima Stock Exchange (Bolsa de Valores de Lima) ("Edegel"), to Enersis S.A. (the "Purchaser") and the repayment of certain indebtedness in connection therewith.
The Solicitation will expire at 5:00 p.m., New York City time, on September 16, 2014, unless extended or earlier terminated (such time on such date, as the same may be extended or earlier terminated, the "Expiration Time"). The Solicitation is subject to customary conditions, including, among other things, the receipt of valid Consents with respect to a majority in aggregate principal amount of the outstanding Notes (the "Requisite Consents") prior to the Expiration Time (which Consents have not been properly revoked prior to the date on which the Supplemental Indenture is executed (the "Effective Date")).
In the event that each of the conditions to the Solicitation described in the Notice are satisfied or waived by the Company, including, but not limited to, the receipt of the Requisite Consents, the Company will pay to each holder of record of Notes as of 5:00 p.m., New York City time, on September 4, 2014 (each such holder, a "Holder"), who has delivered a valid Consent in respect of such Notes prior to the Expiration Time (and has not properly revoked prior to the Effective Date), $2.50 in cash for each $1,000 principal amount of such Notes in respect of which a valid Consent was so delivered (and was not properly revoked) (the "Consent Fee"). The Company will pay the Consent Fee as promptly as practicable following the Expiration Time once all the Conditions have been satisfied or waived by the Company. Holders of Notes who deliver Consents but validly revoke their Consent in accordance with the Notice or deliver Consents after the Expiration Time, will not receive a Consent Fee. Subject to applicable law, the Solicitation may be abandoned or terminated for any reason at any time, including after the Expiration Time and prior to the Proposed Amendments becoming operative, in which case any Consents received will be voided and no Consent Fee will be paid to any Holders.
If the Requisite Consents are received prior to the Expiration Time, the Company intends to promptly execute the Supplemental Indenture. The Proposed Amendments will not become operative unless and until all Conditions have been satisfied or waived and the Consent Fee has been paid. If the Requisite Consents are not received prior to the Expiration Time, the Proposed Amendments will not be adopted and the Consent Fee will not be paid.
IC Spin-Off
The Company's indirect parent company, IC, intends to spin-off certain of its businesses and associated companies (including the Company) to Kenon. Kenon was formed in the first quarter of 2014 in Singapore to serve as the holding company of certain businesses to be contributed by IC, including a 100% interest in IC Power Ltd. ("IC Power"), a power generation company with operations in Latin America, the Caribbean and Israel. IC Power is the direct parent company of the Company and holds 100% of the equity interests in the Company. The Company expects the IC Spin-Off to be consummated in the fourth quarter of 2014. After consummation of the IC Spin-Off, IC Power will continue to hold 100% of the equity interests in the Company; however, Kenon will be the indirect parent company of the Company. Immediately following the IC Spin-Off, the shareholders of IC will also be the shareholders of Kenon in the same proportion as such shareholders hold their shares in IC.
Consummation of the IC Spin-Off would constitute a Change of Control as defined in the Indenture. The Indenture currently requires the Company, following a Change of Control that results in a Rating Event, to make an offer to repurchase all or any part of each Holder's Notes at a cash purchase price equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, on the applicable Notes repurchased, to the date of such repurchase. While the Company currently does not expect the IC Spin-Off to cause a Rating Event and thereby require the Company to make such an offer, the Company is seeking consents from the Holders of the Notes to amend certain provisions of the Indenture to provide certainty that the Company will be able to consummate the IC Spin-Off without being required to make such an offer (such amendments, the "Proposed IC Spin-Off Amendments").
Acter Disposition
On April 30, 2014, Inkia Americas Holdings Limited (the "Seller"), a wholly-owned subsidiary of the Company, the Purchaser and IC Power entered into that certain Share Purchase Agreement (the "SPA") pursuant to which the Seller agreed to sell all of its equity interests in Acter, which indirectly holds all of the Company's equity interests in Edegel, to the Purchaser, a subsidiary of Edegel's indirect controlling shareholder, for $413 million. Edegel is a generator of electricity in Peru, and is listed on the Lima Stock Exchange (Bolsa de Valores de Lima). The Acter Disposition was consummated on September 3, 2014.
Pursuant to the terms of the SPA, prior to the consummation of the Acter Disposition, the Seller was required to repay all of the outstanding indebtedness (the "Acter Debt") under that certain Credit Agreement, dated as of December 20, 2013 (the "Acter Credit Agreement"), among Acter and Credit Suisse AG, Cayman Islands Branch, as administrative agent, with the Company and the Seller party thereto as guarantors. In order to repay the Acter Debt, the Company received a short-term senior loan from IC Power on August 26, 2014 in an amount of $125 million (the "Acter Contribution"). The Company used the proceeds from the Acter Contribution to repay the Acter Debt in an amount of $125 million on August 27, 2014.
The Indenture currently requires the Company, following receipt of Net Cash Proceeds from an Asset Sale, to apply such Net Cash Proceeds to repay senior indebtedness or to reinvest in the business as permitted under the Indenture within 365 days of such Asset Sale (or, within such 365-day period, the Board of Directors of the Company must have made a good faith determination to reinvest in the business as permitted under the Indenture; provided that the Company must have so reinvested within 365 days of such good faith determination). If the Company has not applied such Net Cash Proceeds within such time period, the Indenture currently requires the Company to make an offer to repurchase the Notes with such Net Cash Proceeds at a cash purchase price equal to 100% of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, on the applicable Notes repurchased, to the date of such repurchase. The Indenture also currently provides that the Company may satisfy its obligations under the Asset Sales covenant with respect to any Net Cash Proceeds of an Asset Sale by making an Asset Sale Offer prior to the expiration of the relevant 365-day period.
The Company expects to receive approximately $360 million in Net Cash Proceeds from the Acter Disposition (which reflects the $413 million purchase price less fees, expenses and taxes related thereto). The Company expects to apply $125 million of such Net Cash Proceeds to repay the Acter Contribution. Given the nature of the Company's business, it often takes longer than 365 days for the Company to determine suitable projects to reinvest Net Cash Proceeds. In order to provide the Company with additional flexibility with respect to the timing of the use of the remaining Net Cash Proceeds from the Acter Disposition, the Company is seeking consents from the Holders of the Notes to amend the "Asset Sales" provisions set forth in Section 4.10 of the Indenture so that the Company must apply the Net Cash Proceeds it receives from the Acter Disposition within 30 months of receipt of such Net Cash Proceeds prior to the obligation to make an Asset Sale Offer arising (such amendments, the "Proposed Asset Sale Amendments"). Other than the extension of time to apply the Net Cash Proceeds from the Acter Disposition, all the other requirements of the Asset Sales covenant will apply with respect to such Net Cash Proceeds. If the Company does not receive the Requisite Consents, the Company intends to commence an Asset Sale Offer promptly following the Expiration Time. After consummation of such Asset Sale Offer, the Company will be permitted to apply the Net Cash Proceeds from the Acter Disposition in any manner not otherwise prohibited by the Indenture.
The Indenture currently classifies any payment of interest, principal or other amount on intercompany loans provided by IC or any of its affiliates as a "Restricted Payment." Therefore, the Company's repayment of the Acter Contribution would be a Restricted Payment. The Company is seeking consents from the Holders of the Notes to amend the definition of "Restricted Payment" set forth in Section 4.07 of the Indenture so that the repayment of the Acter Contribution does not constitute a Restricted Payment (such amendments, together with the Proposed Asset Sale Amendments, the "Proposed Acter Disposition Amendments" and, together with the Proposed IC Spin-Off Amendments, the "Proposed Amendments"). The Company could have structured the Actor Contribution as a contribution to the equity capital of the Company, which would have increased the Company's Restricted Payment "builder basket" capacity on a dollar for dollar basis. This would have provided adequate Restricted Payment "builder basket" capacity to redeem or repay the Acter Contribution without the Proposed Amendments. However, due to various reasons, including corporate governance considerations, the Acter Contribution was structured as an intercompany loan, which structure did not result in a corresponding increase in the Company's Restricted Payment "builder basket" capacity. The Proposed Acter Disposition Amendments would allow the Company to repay the Acter Contribution. The Acter Contribution, the repayment of the Acter Debt and the flexibility to repay the Acter Contribution as a result of the Proposed Acter Disposition Amendments would not result in the Holders of the Notes having any less cash within the credit group than if the Acter Contribution were structured as a contribution to the equity capital of the Company. Assuming the Requisite Consents are obtained, the Company intends to repay the Acter Contribution promptly following the Supplemental Indenture becoming operative.
The Proposed Amendments will be effected by a supplemental indenture to the Indenture (the "Supplemental Indenture") that is described in more detail in the Notice.
The Company has engaged Merrill Lynch, Pierce, Fenner & Smith Incorporated and Credit Suisse Securities (USA) LLC to act as Solicitation Agents and D.F. King & Co., Inc. to act as Information and Tabulation Agent for the Solicitation. Questions regarding the Solicitation may be directed to Merrill Lynch, Pierce, Fenner & Smith Incorporated at (888) 292-0070 (toll-free) or (646) 855-8988 (collect) or to Credit Suisse Securities (USA) LLC at (800) 820-1653 (toll-free) or (212) 538-2147 (collect). Requests for documents relating to the Solicitation may be directed to D.F. King & Co., Inc. at (800) 714-3312 (toll-free), (212) 269-5550 (banks and brokers) or email at [email protected].
This press release is for informational purposes only and the Solicitation is only being made pursuant to the terms of the Notice and the related Consent Form. The Solicitation is not being made to, and Consents are not being solicited from, Holders of Notes in any jurisdiction in which it is unlawful to make such Solicitation or grant such Consent. None of the Company, the Trustee, the Solicitation Agents or the Information and Tabulation Agent makes any recommendation as to whether or not Holders should deliver Consents. Each Holder must make its own decision as to whether or not to deliver Consents.
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities.
The Company
The Company is an international electric power generation company based in Latin America and has operations in Peru, Chile, Colombia, the Dominican Republic, Jamaica, Nicaragua, El Salvador and Bolivia and an investment in Panama. The Company owns, operates and develops power plants to generate and sell electricity to distribution companies and unregulated consumers under long-term and short-term power purchase agreements and to the spot market. The Company is an exempted limited liability company organized under the laws of Bermuda with its registered address at Canon's Court, 22 Victoria Street, Hamilton HM12, Bermuda. The Company's primary internet address is http://www.icpower.com. The Company's internet website and the information contained therein or connected thereto is not incorporated herein.
Forward-Looking Statements
This communication and statements made from time to time, other than historical facts, by us and our representatives constitute forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Readers are cautioned not to place undue reliance on these forward-looking statements and any such forward-looking statements are qualified in their entirety by reference to the following cautionary statements. All forward-looking statements speak only as of the date hereof and are based on current expectations and involve a number of assumptions, risks and uncertainties that could cause the actual results to differ materially from such forward-looking statements. Such statements are inherently subject to a variety of risks and uncertainties that could cause actual results to differ materially from those reflected in such forward-looking statements. Actual results may differ materially from those indicated by such forward-looking statements. In addition, the forward-looking statements represent the Company's views as of the date on which such statements were made. The Company anticipates that subsequent events and developments may cause its views to change. However, although the Company may elect to update these forward-looking statements at some point in the future, it specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing the Company's views as of any date subsequent to the date hereof. The Company expressly disclaims a duty to provide updates to forward-looking statements, whether as a result of new information, future events or other occurrences.
SOURCE Inkia Energy Limited
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