Grupo IDESA, S.A. de C.V. Announces Extension of Early Tender Date and Expiration Date and Supplement to Offering Memorandum

MEXICO CITY, April 20, 2020 /PRNewswire/ -- Grupo IDESA, S.A. de C.V. (the "Company") announced today that it has extended the date by which early tenders must be received (the "Early Tender Date") for its exchange offer and consent solicitation (the "Offer and Solicitation") from 5:00 p.m. New York City time on April 10, 2020 to 5:00 p.m. New York City time on May 1, 2020 and it has extended the expiration date (the "Expiration Date") from 5:00 p.m. New York City time on April 17, 2020 to 5:00 pm New York City time on May 1, 2020.  As a result, all Existing Unsecured Notes tendered prior to the Expiration Date will receive the Total Exchange Consideration of US$1,010 principal amount of New Secured Notes for each US$1,000 principal amount of Existing Unsecured Notes tendered.

The Company also announced that it has issued a third supplement (the "Third Supplement") to amend the Offering Memorandum dated March 23, 2020, and supplemented from time to time (as supplemented, the "Offering Memorandum") for its Offer and Solicitation. 

The Third Supplement includes:

• An extension of the Early Tender Date and Expiration Date, which will enable all bondholders to benefit from the Early Tender Consideration until the Expiration Date;

• A description of the terms of the Shareholder Loans (defined below);

• A description of the Existing Term Loan Facility and the Amended Term Loan Facility (defined below);

• An increase in the amount of Cash Interest by 0.25% and an increase in the amount of Mandatory PIK Interest by 0.25%, both beginning after the second anniversary of the issue date, while the Amended Term Loan Facility will benefit from a 0.25% mandatory PIK interest due after the second anniversary of the issue date.

• A removal of the denomination limits for tenders of Existing Unsecured Notes.

After the second anniversary of the issue date, the Cash Interest rate will be increased from 8.875% to 9.125% and the Mandatory PIK Interest rate will be increased from 0.50% to 0.75%, bringing the total interest rate after the second anniversary of the issue date to 9.875%.

Based on information provided by the Exchange and Information Agent, as of 5:00 p.m. New York City time on April 17, 2020, approximately US$158,590,000 of the Existing Unsecured Notes (or approximately 52.86% of the outstanding principal amount thereof) had been validly tendered in the Offer and Solicitation.

Eligible Holders (as defined below) of the Company's 7.875% Senior Notes due 2020 (the "Existing Unsecured Notes") should contact Global Bondholder Services Corporation, the Exchange and Information Agent, or click on the link below to obtain a copy of the Third Supplement to the Offering Memorandum.

Eligible Holders that wish to access the Third Supplement and obtain additional information with respect to the Offer and Solicitation, please visit:
https://gbsc-usa.com/eligibility/grupoidesa

For more information regarding the Shareholder Loans please visit:
https://inversionistas.idesa.com.mx/storage/IDESA%20-%20Shareholder%20Loan%20and%20Amended%20Term%20Loan%20Facility%20(Final).pdf   

If the Offer and Solicitation are not successful, the Company will need to evaluate alternatives to address its upcoming maturities, including under the Existing Unsecured Notes due December 2020 and under a term loan facility due June 2020 (the "Existing Term Loan Facility"). The Company believes that holders of the Existing Unsecured Notes should be informed of the following:

• The Company and its subsidiary Etileno XXI, S.A. de C.V. ("Etileno XXI") are co-borrowers in respect of the Existing Term Loan. Etileno XXI is the owner of the Company's equity investment in the Braskem Idesa joint venture ("Braskem Idesa"). The Existing Unsecured Notes are not guaranteed by, and therefore do not have any direct recourse to Etileno XXI. It is also important to note that Etileno XXI may not be required to file for a reorganization proceeding (concurso mercantil) in Mexico, and may continue making payments in respect of the Existing Term Loan Facility. However, if the Offer and Solicitation are successful, holders of the New Secured Notes will receive a second lien on the shares of Etileno XXI. 

• There are multiple existing shareholder loans from the Company and Etileno XXI to Braskem Idesa (the "Shareholder Loans").  The Company is the owner of 72.5% of the outstanding amounts of the Shareholder Loans as of December 2019, and has pledged its rights under the Shareholder Loans to certain project finance lenders to Braskem Idesa. In a potential concurso mercantil, the residual value, if any, of the portion of the Shareholder Loans owned by the Company would (after the payment of preferential claims) be shared equally among all unsecured creditors of the Company, including both the Existing Unsecured Notes and the Existing Term Loan Facility. However, if the Offer and Solicitation are successful, holders of New Secured Notes would receive a ratable interest (together with the restructured Existing Term Loan Facility) in a contingent first lien on the portion of the Shareholder Loans owned by the Company (subject to the release of the lien on the Shareholder Loans in favor of the project finance lenders).

• A concurso mercantil proceeding will take significantly more time to conclude than the Offer and Solicitation, generate substantial costs to the Company and may have an adverse effect on its business interests. Please refer to the "Risks Related to the Offer and Solicitation" section of the Offering Memorandum for details. As a result, recoveries for holders of Existing Unsecured Notes will be delayed and materially lower in a concurso mercantil proceeding than in the Offer and Solicitation (in which holders of Existing Unsecured Notes are receiving 101% of their nominal claim). In addition, upon entry into concurso mercantil, the unsecured debt would be converted into Mexican Pesos and would only be adjusted by inflation during the concurso mercantil, without generating interest. When the Company would come out of concurso mercantil, the debt can either be paid in Mexican Pesos or converted back into its original currency, which could generate significant losses in case of a depreciation of the currency during such period.

Accordingly, holders of Existing Unsecured Notes are urged to consider participating in the Offer and Solicitation.

The New Secured Notes have not been, and will not be, registered under the Securities Act or any state securities laws. Therefore, unless so registered, the New Secured Notes may not be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws.

The Company intends to apply to list the New Secured Notes on the Official List of the Luxembourg Stock Exchange and for trading on the Euro MTF Market.

The Offer and Solicitation are only made, and copies of the offering documents will only be made available, to a holder of the Existing Unsecured Notes who has certified its status as (1) both a "Qualified Purchaser" for purposes of Section 3(c)(7) under the Investment Company Act of 1940 and a "qualified institutional buyer" as defined in Rule 144A under the Securities Act of 1933, as amended (the "Securities Act") or (2) a person who is not a "U.S. person" as defined in Rule 902(k) under the Securities Act who is not a "Disqualified Non-U.S. Holder" (each, an "Eligible Holder"). 

The Offer and Solicitation are subject to certain conditions, including the requirement that the Company receive valid tenders of at least 95% of the aggregate outstanding principal amount of Existing Unsecured Notes.

The Offer and Solicitation will expire at 5:00 p.m., New York City time, on May 1, 2020, unless extended by the Company in its sole discretion. Existing Unsecured Notes tendered and consents delivered in the Offer and Solicitation will be irrevocable, except to the extent of any withdrawal rights required by applicable law.

THIS PRESS RELEASE IS NOT AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITY.  THE OFFER AND SOLICITATION ARE BEING MADE SOLELY BY THE OFFERING MEMORANDUM THAT MAY BE OBTAINED FROM THE EXCHANGE AND INFORMATION AGENT AND ONLY TO SUCH PERSONS AND IN SUCH JURISDICTIONS AS IS PERMITTED UNDER APPLICABLE LAW.  ANY PUBLIC OFFERING OF SECURITIES TO BE MADE IN THE UNITED STATES WILL BE MADE BY MEANS OF A PROSPECTUS THAT MAY BE OBTAINED FROM THE COMPANY OR THE SELLING SECURITY HOLDER THAT WILL CONTAIN DETAILED INFORMATION ABOUT THE COMPANY AND MANAGEMENT, AS WELL AS FINANCIAL STATEMENTS.

The New Secured Notes and Guarantees have not been and will not be registered under the Securities Act of 1933, as amended (the "Securities Act"). The Offer and Solicitation are made, and the Total Exchange Consideration or the Base Exchange Consideration, as the case may be, are being offered in the United States only to U.S. Persons that are qualified purchasers ("Qualified Purchasers") for purposes of Section 3(c)(7) under the Investment Company Act of 1940, as amended (the "1940 Act") who are also qualified institutional buyers within the meaning of Rule 144A under the Securities Act ("Qualified Institutional Buyers") and to non U.S. Persons as defined in Rule 902(K) under the Securities Act that are not a "Disqualified Non-U.S. Holder." The New Secured Notes are also being offered outside the United States in compliance with Regulation S under the Securities Act ("Regulation S"). The Company, as issuer, has not been registered as an investment company under the 1940 Act.

Exchange and Information Agent

Global Bondholder Services Corporation
65 Broadway, Suite 404
New York, NY 10006
212-430-3774 (Banks and Brokers)
866-470-3700 (toll free)
[email protected] 
Attn: Corporate Actions

Rothschild & Co México, S.A. de C.V.

Daniel Nicolaievsky
Managing Director and Co-Head
Phone: +52 (55) 5327 1450
[email protected] 

Victor Leclercq
Managing Director and Co-Head
Phone: +52 (55) 5327 1450
[email protected] 

SOURCE Grupo IDESA, S.A. de C.V.