Swiss Insured Brazil Power Finance S.À R.L. Announces Commencement Of Consent Solicitation In Relation To Its Outstanding 9.850% Senior Secured Notes Due 2032

LUXEMBOURG, June 25, 2021 /PRNewswire/ -- Swiss Insured Brazil Power Finance S.à r.l. a private limited liability company (société à responsabilité limitée), incorporated and existing under Luxembourg law, having its registered office at 14, rue Edward Steichen, L-2540 Luxembourg, Grand Duchy of Luxembourg, registered with the Luxembourg Register of Commerce and Companies under number B 217648 (the "Company") announced today that it has commenced a solicitation (the "Consent Solicitation") of consents ("Consents") from each registered holder ("Holder") of its 9.850% Senior Secured Notes due 2032 (the "Notes"), issued and outstanding under the indenture, dated as of April 12, 2018, among the Company, CELSE – Centrais Elétricas de Sergipe S.A., as guarantor ("CELSE"), and Citibank, N.A., as trustee (in such capacity, the "Trustee"), to permit the Company, as the sole holder of certain debentures issued by CELSE pursuant to an indenture (as amended, the "Debenture Indenture"), dated as of March 28, 2018, among CELSE, Pentágono S.A. Distribuidora de Títulos e Valores Mobiliários, as fiduciary agent (the "Fiduciary Agent") and Credit Suisse AG, in its capacities as policyholder and policyholder agent (the "Policyholder Agent"), to instruct the Fiduciary Agent to (i) amend (the "Proposed Amendments") certain provisions of (a) the Common Terms Agreement (as amended, the "Common Terms Agreement"), dated as of April 12, 2018, among CELSE, the senior lenders party thereto (the "Senior Lenders") and the Senior Lender representatives named therein, the Fiduciary Agent, the Policyholder Agent and Citibank, N.A., as project intercreditor agent (the "Project Intercreditor Agent"), on behalf of the Senior Lenders, (b) the Debenture Indenture, (c) the Amended and Restated Collateral Accounts and Security Agreement,  dated as of February 4, 2019 (as amended, the "Accounts Agreement"), among CELSE, the Fiduciary Agent, the Policyholder Agent, the Project Intercreditor Agent and the other parties thereto, (d) the Conditional and Fiduciary Assignment Agreement, dated as of March 21, 2018, and amended on April 3, 2018 among CELSE, CELSEPAR – Centrais Elétricas de Sergipe S.A., Banco Citibank S.A and others (as amended "Conditional and Fiduciary Assignment Agreement"), and (e) certain other collateral documents, in each case, solely as is necessary to permit CELSE to incur (and secure with the WC Collateral (as defined below) the Working Capital Facility (as defined below); and (ii) consent  (the "Proposed Consent", and together with the Proposed Amendments, the "Proposed Consent and Amendments") to release the existing security over the variable revenues (the "Variable Revenues") to be received by CELSE (a) under the Power Purchase Agreements (Contratos de Comercialização de Energia no Ambiente Regulado - CCEARs) in the Brazilian Regulated Environment (the "PPAs") entered into between CELSE and the distribution companies and (b) from spot free market sales of energy, in each case, solely to permit such assets to secure the Working Capital Facility (as defined below).

The Notes are currently listed on the Official List of the Luxembourg Stock Exchange (the "LuxSE") and admitted to trading on the Euro MTF market of the LuxSE.

The Consent Solicitation is being made by means of the Company's consent solicitation statement, dated June 25, 2021 (the "Consent Solicitation Statement"). Holders are referred to the Consent Solicitation Statement for detailed terms and conditions of the Consent Solicitation. The Consent Solicitation will expire at 5:00 p.m. (New York City time) on July 1, 2021 (the "Expiration Time"), unless extended or earlier terminated by the Company in its sole discretion. Consents delivered may be validly revoked at any time prior to the earlier to occur of: (i) the time at which the requisite Consents are received and (ii) the Expiration Time.

Primarily as a result of the ongoing and extreme lack of rainfall in Brazil for the past several months, the adverse hydrological conditions in Brazil will result in unanticipated and persistent dispatch of CELSE's combined cycle power plant. Commencing in July 2021, CELSE is expected to dispatch continuously through at least December 2021. Accordingly, in order to satisfy its dispatch requirements, CELSE requires a new working capital facility to facilitate the posting of certain letters of credit in favor of the supplier of LNG and the financing of LNG costs prior to CELSE receiving the related Variable Revenues. Without such a working capital facility, CELSE would be unable to purchase LNG needed to satisfy its dispatch requirements, which could result in various fines and penalties being imposed by the Brazilian energy regulators. Accordingly, CELSE plans to incur a working capital facility in an aggregate principal amount up to $175 million (the "Working Capital Facility") to finance certain LNG costs and post letters of credit in favor of its LNG suppliers, which Working Capital Facility would be secured solely by (i) the Variable Revenues received by CELSE and (ii) the escrow account into which the Variable Revenues will be deposited (collectively, the "WC Collateral"). The recourse of the Working Capital Facility lenders (the "Working Capital Facility Lenders") to CELSE or CELSE's property or assets will be limited to the WC Collateral and they will not receive the benefit of any other security interests from CELSE. In addition, the Working Capital Lenders will enter into a subordination agreement with the Senior Lenders in order to limit such recourse.

The ultimate purpose of the Consent Solicitation is to authorize CELSE to enter into agreements that (i) amend the definitions of "Permitted Indebtedness" and "Permitted Liens" in the Common Terms Agreement and in the Debenture Indenture, (ii) amend the Accounts Agreement to permit CELSE to open a segregated escrow account into which, among other funds, the Variable Revenues will be transferred, (iii) release the security over the Variable Revenues received by CELSE and (iv) make any other modifications or waivers to the Common Terms Agreement, the Debenture Indenture, the Accounts Agreement, the Conditional and Fiduciary Assignment Agreement, or any other collateral document, that are necessary to permit CELSE to incur (and secure with the WC Collateral) the Working Capital Facility.

Subject to certain conditions, including the receipt of the requisite Consents and the satisfaction of the conditions precedent agreed with the Senior Lenders and/or SERV in connection with the Proposed Consent and Amendments, Holders who validly deliver and not validly revoke their Consents at or prior to the Expiration Time pursuant to the terms of the Consent Solicitation Statement will be eligible to receive a consent payment of R$2.50 per R$1,000 principal amount of the Notes.

The Company has engaged Goldman Sachs & Co. LLC to act as solicitation agent (the "Solicitation Agent") for the Consent Solicitation. D. F. King & Co., Inc. has been engaged to act as the information and tabulation agent (the "Information and Tabulation Agent") for the Consent Solicitation. Any questions or requests for assistance concerning the terms of the Consent Solicitation may be made to Goldman Sachs & Co. LLC at [email protected], +1 (800) 828-3182 (toll free) or +1 (212) 357-1452 (collect). Questions or requests for assistance relating to the procedures for delivering Consents or additional copies of the Consent Solicitation Statement and any related documents may be directed to D.F. King & Co., Inc. at [email protected], +1 (866) 751-6313 (toll free) or +1 (212) 269-5550 (collect).

Forward-Looking Statements

The Company cautions you that statements included in this announcement that are not a description of historical facts are forward-looking statements that involve risks, uncertainties, assumptions and other factors which may not materialize or prove correct. These include, among others, statements with respect to the terms and timing for completion of the Consent Solicitation, the receipt of the requisite Consents, and the payment of the consent fee. There can be no assurance that the transactions contemplated in this announcement will be consummated. The Company assumes no obligation to update any forward-looking statement included in this announcement to reflect events or circumstances arising after the date on which it was made.

The Solicitation Agent takes no responsibility for the contents of this announcement. This announcement must be read in conjunction with the Consent Solicitation Statement. This announcement and the Consent Solicitation Statement contain important information which should be read carefully and in its entirety before any decision is made in connection with the Consent Solicitation. If you are in any doubt as to the action you should take, you are recommended to seek your own financial advice immediately from your stockbroker, bank manager, accountant or other independent financial adviser.

None of the Company, CELSE, the Trustee, the Fiduciary Agent, the Policyholder Agent, the Solicitation Agent, the Information and Tabulation Agent or their respective affiliates, makes any recommendation as to whether or not Holders should deliver Consents. This announcement is for informational purposes only and is not a solicitation of Consents. The Consent Solicitation is only being made pursuant to the Consent Solicitation Statement. The Company reserves the right to waive or modify any term of, or to terminate, the Consent Solicitation, for any reason, prior to the Expiration Time.

This announcement is neither an offer to sell nor a solicitation of an offer to buy any security. The Notes described herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws, and they may not be offered or sold in the United States or to U.S. persons absent registration or an applicable exemption from the registration requirements of the Securities Act. 

SOURCE Swiss Insured Brazil Power Finance S.à r.l.