Ecuador Social Bond S.à r.l Announces Commencement of Consent Solicitation
LUXEMBOURG, July 28, 2020 /PRNewswire/ -- Ecuador Social Bond S.à r.l (the "Company") announced today that it is soliciting the consent ("Consents") of holders of the 2.60% Class A Social Notes due 2035 (the "Class A Notes") and the Zero Coupon Class B Social Notes due 2035 (the "Class B Notes"; together with the Class A Notes, individually, a "S.à r.l Note" and collectively, the "S.à r.l Notes").
The S.à r.l Notes were issued on January 30, 2020 in an aggregate principal amount of Class A Notes of U.S.$ 230,961,000 and in an aggregate principal amount of Class B Notes of U.S.$ 326,852,000. As of the date hereof, such aggregate principal amounts are currently outstanding and no scheduled principal amortization payments have occurred with respect to either the Class A Notes or the Class B Notes. A principal amortization payment on the Class B Notes is scheduled to be paid on July 30, 2020, in the aggregate principal amount of U.S.$ 11,497,507.00, which would result in a remaining principal balance for the Class B Notes of U.S.$ 315,354,493.00.
The purpose of the Consent Solicitation (as defined below) is to solicit the Consents of holders of the S.à r.l. Notes (the "Holders") relating to certain modifications (the "Ecuador Social Bond Modifications") that the Company has been requested to approve relating to the Company's interest as the sole holder of the Republic of Ecuador's U.S. $400,000,000 7.25% Ecuador Social Bonds due 2035 (the "Ecuador Social Bonds") issued by the Republic of Ecuador (the "Republic") pursuant to an indenture dated January 30, 2020 (the "Ecuador Social Bonds Indenture").
On April 17, 2020, holders of certain securities of the Republic gave their consent to certain proposed amendments to each of the Republic's eligible bonds pursuant to two consent solicitations pursuant to which the Republic modified the applicable indentures of such eligible bonds to defer until August 15, 2020 (or August 10, 2020 if a new successor IMF supported program was not publicly announced by the IMF and Ecuador by that date), all scheduled interest payments due under the eligible bonds between March 27, 2020 and July 15, 2020, and exclude from the events of default set forth in the Republic's eligible bonds cross defaults arising from defaults under certain unmodified eligible bonds and the Ecuador Social Bonds (provided that, with respect to the Ecuador Social Bonds, the Republic commenced a consent solicitation for the Ecuador Social Bonds by July 20, 2020).
Accordingly, on July 20, 2020, the Republic delivered to us a consent solicitation request letter proposing a form of supplemental indenture to effect the Ecuador Social Bond Modifications. Pursuant to Section 6.16 of the trust indenture governing the Class A Notes and Class B Notes dated as of January 30, 2020 (the "S.à r.l Notes Indenture"), among, us, The Bank of New York Mellon, as indenture trustee (the "Indenture Trustee") and in certain other capacities, and The Bank of New York Mellon, London Branch, as initial paying agent, we shall not consent to any extension, adjustment, rescission, amendment or other modification of the Ecuador Social Bonds (or any agreements with respect thereto) without the consent of the Majority Holders (as defined below) in accordance with Article 10 (Amendments) of the S.à r.l Notes Indenture. In this regard, we have commenced a solicitation of consents from Holders of the S.à r.l Notes (the "Consent Solicitation"). The terms and conditions of the Consent Solicitation are set forth in the Consent Solicitation Statement dated July 28, 2020 (the "Consent Solicitation Statement").
On July 20, 2020 the Republic announced that it is seeking to modify the terms of approximately U.S.$17.4 billion of its external bonds and to that end commenced a solicitation of consents from eligible holders to amend each series of eligible bonds and their respective indentures and an invitation to exchange eligible bonds for new securities (to be issued by the Republic under a new master indenture) (the "Invitation"). According to the Republic, the overall purpose of the Invitation is to create the conditions of long-terms sustainability of the Republic's debt burden, and we understand from the Republic that the Ecuador Social Bond Modifications are consistent with that purpose. As we have been informed by the Republic, the changes sought to be effected by the modifications to the Ecuador Social Bonds are intended to exclude from the Ecuador Social Bonds the same cross-default provisions of those Excluded Republic Bonds that are not modified pursuant to the Invitation.
If adopted, the Ecuador Social Bond Modifications will amend the terms of the Ecuador Social Bonds and the Ecuador Social Bonds Indenture to exclude from the Events of Default (as defined in the Ecuador Social Bonds Indenture) set forth in the Ecuador Social Bonds cross defaults arising from defaults under, and defaults arising from the entering or issuance of judgments and arbitral awards relating to each series of the Republic's 10.750% Notes due 2022, 8.750% Notes due 2023, 7.950% Notes due 2024, 7.875% Notes due 2025, 9.650% Notes due 2026, 9.625% Notes due 2027, 8.875% Notes due 2027, 7.875% Notes due 2028, 10.750% Notes due 2029 and 9.500% Notes due 2030, in each case outstanding as of the date of the supplemental indenture (the "Excluded Republic Bonds"); unless and until each such series of Excluded Republic Bonds is amended after the date of the supplemental indenture with respect to any Reserved Matter (as defined in the relevant indenture governing the Excluded Republic Bonds) in accordance with a definitive consent solicitation transaction reflecting the Republic's debt reprofiling plans. Any series of Excluded Republic Bonds that is not amended by Ecuador pursuant to such a consent solicitation will continue to constitute Excluded Republic Bonds for purposes of the Ecuador Social Bonds, thereby isolating any Event of Default that may occur on such series of Excluded Republic Bonds. Conversely, any series of Excluded Republic Bonds amended by Ecuador pursuant to such a consent solicitation will again be considered for purposes of the Events of Default relating to cross defaults, judgments and arbitral awards in the Ecuador Social Bonds.
As we have been informed by the Republic, the changes sought to the Ecuador Social Bonds will not alter the Republic's obligation to pay the principal of or interest on the Ecuador Social Bonds when due, the interest rate (and accrual thereof), the maturity date therefor or the Inter-American Development Bank's guarantee of the Ecuador Social Bonds.
Such modifications will not (i) alter our obligation to pay the principal of or interest on the S.à r.l Notes when due, the interest rate (and accrual thereof), the maturity date therefor or (ii) result in an amendment to the S.à r.l Notes or the S.à r.l Notes Indenture.
Pursuant to the covenants contained in the S.à r.l Notes Indenture, we are permitted to consent to the Ecuador Social Bond Modifications only at the direction of the Majority Holders (the "Requisite Consents"). "Majority Holders" for purposes of the Consent Solicitation means Holders of a majority of the Note Balance as of the Expiration Time (as defined below); and "Note Balance" means an aggregate amount equal to:
- the outstanding principal balance of the Class A Notes; plus
- the outstanding principal balance of the Class B Notes multiplied by the Class B Notes Principal Ratio (which is equal to U.S.$ 169,039,000 divided by the outstanding principal balance of all Class B Notes).
The principal balance of Class B Notes for which Consents are delivered will be multiplied by the Class B Notes Principal Ratio in order to assess whether the Requisite Consents have been obtained.
As of the Expiration Time, assuming the July 30, 2020 principal amortization payment on the Class B Notes is paid in full, the Class B Notes Principal Ratio will be 0.53602851 (which is equal to U.S.$ 169,039,000 divided by U.S.$ 315,354,493).
Holders of S.à r.l Notes may only participate in the Consent Solicitation by using the procedure of Euroclear or Clearstream. A beneficial owner wishing to participate in the Consent Solicitation and who holds an interest in S.à r.l Notes through a Direct Participant must properly instruct such Direct Participant to cause a Consent to be given in respect of such S.à r.l Notes on such beneficial owner's behalf at or prior to the Expiration Time. No record date has been set for this Consent Solicitation. Accordingly, S.à r.l Notes with respect to which consents are given in the Consent Solicitation will be blocked from transfer in the applicable Clearing System (as defined below) until the earlier of the Expiration Time and the time at which the Consent Solicitation is terminated.
We are not offering to pay a fee to any Holder in connection with this Consent Solicitation.
The Expiration Time for this Consent Solicitation is 5:00 p.m., Central European Summer Time (11:00 a.m., New York City time), on August 3, 2020, as such date and time may be extended by us in our sole discretion (the "Expiration Time"). Consents will be irrevocable, except under limited circumstances. By delivering a Consent at or prior to the Expiration Time and not revoking, if applicable, such Consent, each Holder agrees to direct us to give our consent to the Ecuador Social Bond Modifications, subject to the receipt of Requisite Consents.
We reserve the right to waive or modify any term of, or terminate, the Consent Solicitation at any time and in its sole discretion. We reserve the rights in our sole discretion to reject any and all Consents with respect to the S.à r.l Notes.
Identifiers for the S.à r.l Notes consist of ISINs:
- Class A Notes: XS2106052827 / XS2106052405;
- Class B Notes: XS2106053635 / XS2106053551.
This announcement is for informational purposes only and is not a solicitation of consents of any Holders of S.à r.l Notes. The solicitation of consents of Holders of S.à r.l Notes is only being made pursuant to the Consent Solicitation. Each Holder of S.à r.l Notes should read the Consent Solicitation Statement carefully prior to making any decision with respect to providing its consent because it contains important information.
The Company will make (or cause to be made) all announcements regarding the Consent Solicitation by press release in accordance with applicable law.
We have not registered the Consent Solicitation or the S.à r.l Notes under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities law. The consents may not be solicited in the United States or to any U.S. persons except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Consents are being solicited only from holders of the S.à r.l Notes that are (1) "qualified institutional buyers" as defined in Rule 144A under the Securities Act ("QIBs"), (2) "institutional accredited investors" within the meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act ("IAI"), and (3) outside the United States, in compliance with Regulation S under the Securities Act.
In connection with this Consent Solicitation, Citigroup Global Markets Inc. is acting as Consent Solicitation Agent (the "Consent Solicitation Agent") and Global Bondholder Services Corporation is acting as Information and Tabulation Agent (the "Information and Tabulation Agent").
For the avoidance of doubt, the proposed Ecuador Social Bond Modifications are not being proposed by us, the trustee of the S.à r.l Notes Indenture, the Consent Solicitation Agent or the Information and Tabulation Agent; you are being asked pursuant to the S.à r.l Notes Indenture to permit us to approve the modifications to the Ecuador Social Bond Indenture by the Ecuador Social Bond Modifications.
The proposed Ecuador Social Bond Modifications are proposed by the Republic in connection with its Ecuador Social Bonds. Because we are the 100% holder of the Ecuador Social Bonds, the Republic has requested our consent in the Ecuador Social Bond Consent.
None of the Company, the Consent Solicitation Agent, the trustee of the S.à r.l Notes Indenture, the Information and Tabulation Agent, or any of their respective directors, employees, affiliates, agents or representatives makes any recommendation as to whether Holders should deliver Consents pursuant to this Consent Solicitation, and no one has been authorized by any of them to make such a recommendation. Each Holder must make its own decision as to whether to give a Consent.
The Consent Solicitation Statement will be available from the Information and Tabulation Agent.
The Information and Tabulation Agent for the Consent Solicitation
Global Bondholder Services Corporation
65 Broadway – Suite 404
New York, New York 10006
Attn: Corporate Actions
Banks and Brokers call: (212) 430-3774
Toll free: (866)-470-3800
By facsimile:
(212) 430-3775/3779
Confirmation:
(212) 430-3774
Email: [email protected]
If you have any questions about this Consent Solicitation, you should contact Citigroup Global Markets Inc. or Global Bondholder Services Corporation at their respective addresses and telephone numbers. Requests for copies of this Consent Solicitation Statement may be directed to the Information and Tabulation Agent.
The Consent Solicitation Agent
Citigroup Global Markets Inc.
388 Greenwich Street, 7th Floor
New York, New York 10013
Attn: Liability Management Group
Toll Free:+1-800-558-3745
Collect: +1-212- 723-6106
*********
Ecuador Social Bond S.à r.l.
c/o TMF Luxembourg S.A.
46A, Avenue J.F. Kennedy,
L-1855 Luxembourg
Tel: +352 42 71 711
Attention: the Board of Managers
SOURCE Ecuador Social Bond S.à r.l
Share this article