NEW YORK, May 13, 2019 /PRNewswire/ -- The ad hoc group of bondholders (the "Ad Hoc Group") of U.S.J. – Açúcar e Álcool S.A. (the "Company" or the "USJ Group"), representing, approximately 45% of the outstanding 9.875% Senior Unsecured Notes due 2019 and 70% of the outstanding 9.875%/12.00% Senior Secured PIK Toggle Notes due 2021 (the "Existing Notes") announces that, in connection with the exchange offer launched by the Company pursuant to the Exchange Offer Memorandum and Consent Solicitation Statement (the "Offering Memorandum") for any and all of the Existing Notes dated March 25, 2019, as supplemented by the Supplements to the Offering Memorandum dated May 1, 2019 and May 8, 2019 (the "Exchange Offer"), the Ad Hoc Group supports the revised terms and conditions of the Exchange Offer and intends to tender its Existing Notes in the Exchange Offer for newly issued 9.875%/10.500% Senior Secured PIK Notes due 2023 ("New Notes"). The Ad Hoc Group believes that the revised terms and conditions address the Company's short-term liquidity needs and sets up the Company for long-term success. The exchange offers bondholders improved conditions under the New Notes, including profits from the Company's joint venture with Cargill, as detailed below:
- Improved collateral package: the New Notes collateral package will be fully comprised of fiduciary lien collateral, giving the New Notes extraconcursal status. The collateral package will be comprised of tangible assets, including the São João Mill, high-value land, and sugarcane, as well as rights over cash flows from certain financial assets, including the right to all cash dividends, profits or other distributions from the Company's joint venture with Cargill, SJC Bioenergia Ltda. ("SJC"), (on a conditional basis) the residual rights of the Company to payments derived from precatórios held by Copersucar against the Federal Government ("IAA Precatorios") and the proceeds of any sale of its interest in SJC.
- Sale of equity interest in SJC: the Company has agreed to actively seek a buyer to acquire its equity stake in the SJC following the exchange offer ("SJC Sale"), and bondholders will have the right in certain circumstances to require the Company to complete a SJC Sale. All proceeds from a sale of the Company's equity interests in SJC shall be applied in the early redemption of the New Notes. For further information regarding the SJC Sale, please refer to the Exchange Offer.
- Anticipated amortization schedule: principal on the New Notes will be repaid in accordance with the following amortization schedule: (i) US$50 million on January 31, 2021; (ii) US$50 million on January 31, 2022, (iii) US$25 million on January 31, 2023; and (iv) the remaining outstanding principal amount on November 9, 2023.
- Interest schedule: interest under the New Notes will be payable on each interest payment date in cash or in kind, as follows: (i) November 9, 2019, at 10.500% per annum from the last date on which interest has been paid, with the full amount of interest being paid in kind; (ii) May 9, 2020, at 10.500% per annum, with (a) 4.200% per annum on the outstanding principal amount of the New Notes being paid in kind, and (b) 6.300% per annum on the outstanding principal amount of the New Notes being paid in cash; and (iii) for interest payment dates falling after May 9, 2020, 9.875% per annum, with the full amount of interest being paid in cash.
The Ad Hoc Group is committed to working with the Company towards a successful implementation of the Exchange Offer.
The Ad Hoc Group is represented by Padis Advogados and Davis Polk & Wardwell LLP.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy the New Notes, or any other securities.
The Ad Hoc Group does not have or assume any fiduciary or other duties to any party. This press release is not intended as a solicitation in connection with any securities transaction.
SOURCE Ad Hoc Group of USJ Noteholders