Grupo IDESA, S.A. de C.V. Announces Offer to Exchange Existing Secured Notes for New Secured Notes and Cash Consideration

MEXICO CITY, March 28, 2023 /PRNewswire/ -- Grupo IDESA, S.A. de C.V. (the "Company") today announced the commencement of an exchange offer and consent solicitation (the "Offer and Solicitation") for any and all of its outstanding 9.375% Senior Notes due 2026 (the "Existing Secured Notes") held by Eligible Holders (defined below) for 6.50% Senior Notes due 2028 (the "New Secured Notes") to be issued by the Company and cash consideration, as applicable, and accrued and unpaid interest on the Existing Secured Notes through, but excluding, the settlement date of the Offer and Solicitation to be paid in cash.

If Eligible Holders validly tender an aggregate principal amount of Existing Secured Notes less than or equal to US$100 million on or prior to April 11, 2023 (the "Early Tender Date") and elect "Option A", such Eligible Holders will receive US$0.775 in cash per US$1.00 principal amount of Existing Secured Notes, up to an aggregate cash consideration of US$77.5 million, payable on a pro rata basis. In the event that more than US$100 million aggregate principal amount of Existing Secured Notes is validly tendered on or prior to the Early Tender Date, Eligible Holders will receive a combination of the cash consideration described above and New Secured Notes. The difference between (i) the aggregate principal amount of Existing Secured Notes validly tendered on or prior to the Early Tender Date and (ii) US$100 million will be paid ratably to Eligible Holders with US$1.00 of New Secured Notes received for each US$1.00 principal amount of Existing Secured Notes tendered.

Eligible Holders who tender their Existing Secured Notes on or prior to the Early Tender Date and elect "Option B" will receive US$1.00 of New Secured Notes for each US$1.00 principal amount of Existing Secured Notes tendered.

Eligible Holders who tender after the Early Tender Date but before the expiration date of April 25, 2023 (unless extended by the Company in its sole discretion) will receive US$0.95 of New Secured Notes for each US$1.00 principal amount of Existing Secured Notes tendered whether they elect Option A or Option B. 

The New Secured Notes will mature on the fifth anniversary of the settlement date for the Offer and Solicitation and will bear interest from the settlement date, as described in the Offering Memorandum (as defined below). The New Secured Notes will be fully and unconditionally guaranteed by Etileno XXI, S.A. de C.V. ("Etileno XXI"); Alveg Distribución Química, S.A. de C.V.; Excellence Sea & Land Logistics, S.A. de C.V. ("Excellence Sea & Land"); Industrias Derivados del Etileno, S.A. de C.V.; Inmobiliaria Idesa, S.A. de C.V.; Síntesis Orgánicas, S.A. de C.V.; and Novidesa, S.A. de C.V. ("Novidesa") (the "Subsidiary Guarantors").  In addition to adding Etileno XXI as a guarantor of the New Secured Notes, the collateral supporting the New Secured Notes have been enhanced by (i) a first-priority lien on all shares of Etileno XXI; ii) a conditional first-priority lien on any receivables (net of any taxes and retentions) payable to the Company and Etileno XXI under the Braskem Idesa shareholder loans; and (iii) a first-priority lien on all of the Company's right to collect payment from available funds in respect of the Braskem Idesa shareholder loans. The New Secured Notes effectively will rank senior in right of payment to all of our existing and future unsecured indebtedness, including the Existing Secured Notes (which will become unsecured indebtedness if the Offer and Solicitation is successful), to the extent of the Collateral. 

In addition, as part of the Offer and Solicitation, the Company is soliciting from the holders of the outstanding Existing Secured Notes consents (the "Consents") to amend or waive provisions of the indenture governing the Existing Secured Notes (the "Solicitation"). The purpose of the Solicitation is to eliminate or amend certain covenants and other operative provisions of the indenture and to release the liens on all of the collateral currently securing the Existing Secured Notes.

The Offer and Solicitation are being conducted upon the terms and subject to the conditions set forth in an Offering Memorandum, dated March 28, 2023 (the "Offering Memorandum").  Beneficial owners of Existing Secured Notes should carefully read the Offering Memorandum regarding the relevant procedures and timing to tender their Existing Secured Notes. 

The New Secured Notes have not been, and will not be, registered under the Securities Act of 1933, as amended (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 Secured 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 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 85% of the aggregate outstanding principal amount of Existing Secured Notes and the successful closing of a borrowing agreement with an affiliate of the Company, pursuant to which the affiliate will loan up to US$77.5 million to the Company for a period of five years and six months at an interest rate no greater than 6.5%, in order to fund the cash consideration.

The Offer and Solicitation will expire at 5:00 p.m., New York City time, on April 25, 2023, unless extended by the Company in its sole discretion.  Existing Secured 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 have not been and will not be registered under the Securities Act.  The Offer and Solicitation are made in the United States only to U.S. Persons that are 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 and to 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." The New Secured Notes are also being offered outside the United States in compliance with Regulation S under the Securities Act.  The Company, as issuer of the New Secured Notes, has not been registered as an investment company under the 1940 Act.

THE OFFER AND SOLICITATION IS NOT BEING MADE IN MEXICO. THE NEW SECURED NOTES HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE MEXICAN NATIONAL SECURITIES REGISTRY (REGISTRO NACIONAL DE VALORES) MAINTAINED BY THE COMISIÓN NACIONAL BANCARIA Y DE VALORES (NATIONAL BANKING AND SECURITIES COMMISSION OF MEXICO, OR THE "CNBV") AND, THEREFORE, THE NEW SECURED NOTES MAY NOT BE PUBLICLY OFFERED OR SOLD NOR BE THE SUBJECT OF BROKERAGE ACTIVITIES IN MEXICO, ABSENT AN AVAILABLE EXEMPTION UNDER THE MEXICAN SECURITIES MARKET LAW (LEY DEL MERCADO DE VALORES). AS REQUIRED UNDER THE MEXICAN SECURITIES MARKET LAW, THE COMPANY WILL NOTIFY CNBV OF THE OFFERING OF THE NEW SECURED NOTES OUTSIDE OF MEXICO. SUCH NOTICE WILL BE DELIVERED TO THE CNBV TO COMPLY WITH A LEGAL REQUIREMENT AND FOR INFORMATION PURPOSES ONLY, AND THE DELIVERY OF SUCH NOTICE TO, AND THE RECEIPT OF SUCH NOTICE BY, THE CNBV, DOES NOT CONSTITUTE OR IMPLY ANY CERTIFICATION AS TO THE INVESTMENT QUALITY OF THE NEW SECURED NOTES, THE COMPANY'S SOLVENCY, LIQUIDITY OR CREDIT QUALITY OR THE ACCURACY OR COMPLETENESS OF THE INFORMATION SET FORTH HEREIN. THIS ANNOUNCEMENT AND THE OFFERING MEMORANDUM HAVE NOT BEEN FILED WITH THE CNBV, AND THE CNBV HAS NOT REVIEWED OR AUTHORIZED THE CONTENT OF THIS ANNOUNCEMENT OR THE OFFERING MEMORANDUM.

Eligible Holders that wish to obtain additional information with respect to the Offer and Solicitation, including accessing the Offering Memorandum, please visit:
https://gbsc-usa.com/eligibility/idesa

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