Frigorífico Concepción S.A. Announces Commencement of Consent Solicitation

CONCEPCIÓN, Paraguay, Sept. 21, 2020 /PRNewswire/ -- Frigorífico Concepción S.A. (the "Company") announced today that it has commenced a solicitation of consents (the "Consent Solicitation") to holders of its 10.25% Senior Secured Notes due 2025 (the "Notes") for amendments to certain provisions of the Indenture governing the Notes, dated as of January 29, 2020 (the "Indenture"), among the Company, as Issuer, each of the Guarantors party thereto, Wilmington Trust, National Association, as Trustee, Registrar, Paying Agent and Securities Intermediary (the "Trustee"), and GLAS Americas LLC, as collateral agent (the "Collateral Agent") and additional ancillary and consequential amendments to the Indenture and other Transaction Documents (as defined in the Indenture) in order to give effect to the intent of such amendments. Terms used but not defined herein have the meanings given to them in the Indenture.

The Consent Solicitation is being made on the terms and subject to the conditions contained in the Consent Solicitation Statement dated September 21, 2020 (the "Consent Solicitation Statement") prepared by the Company in connection with the Consent Solicitation and is subject to the solicitation and distribution restrictions set out below and as more fully described in the Consent Solicitation Statement. Holders of the Notes are advised to read carefully the Consent Solicitation Statement for full details of, and information on the procedures for participating in, the Consent Solicitation.

The Notes were originally issued on January 29, 2020 in an aggregate principal amount of US$100,000,000. As of the date of the Consent Solicitation Statement, US$100,000,000 in aggregate principal amount of the Notes remains outstanding.

The Company is intending, subject to market conditions, to make an issuance of additional Notes ranking pari passu with the Notes which additional Notes shall be consolidated with and form a single class with the Notes that were issued on January 29, 2020. The offering of such additional Notes (the "Concurrent Additional Notes Offering") is being conducted concurrently with the Consent Solicitation and is conditional upon the consummation of the Consent Solicitation. The Company intends to terminate the Consent Solicitation if it believes that the Concurrent Additional Notes Offering will not be completed after the consummation of the Consent Solicitation.

The primary purpose of the Consent Solicitation is to make amendments to the Indenture that would permit the Company to issue additional Notes pursuant to the Concurrent Additional Notes Offering while continuing to satisfy the collateral requirements in the Indenture, in a way that the Company believes does not have an adverse effect on Holders.  The Indenture as currently drafted (i) allows only receivables of the Company (and not receivables of its Bolivian subsidiary) to qualify as receivables collateral, (ii) requires that a 60:40 ratio of real estate property and equipment collateral to receivables collateral be maintained and (iii) does not allow cash from the proceeds of an issuance of additional Notes deposited in the Collections Account (as defined in the Indenture) to count toward the receivables collateral requirement for the purposes of issuing additional Notes.  The Company seeks to amend these requirements so that (a) receivables of its Bolivian subsidiary will qualify as receivables collateral, (b) there will be no required ratio to be maintained between real estate property and equipment collateral and receivables collateral so long as receivables collateral with a value of at least 50% of the principal amount of the Notes is maintained and (c) cash deposited in the Collections Account from the proceeds of the issuance of additional Notes will count as receivables collateral.   Other amendments being proposed pursuant to the Consent Solicitation include an increase in the maximum Leverage Ratio under the "Limitation on Incurrence of Additional Indebtedness" covenant applicable to the period from the issue date of the New Notes to January 29, 2021, certain amendments to the definitions of "Permitted Indebtedness," "Permitted Liens" and "Collections Account" and correction of defects in certain other provisions of the Indenture.         

If approved, the proposed amendments (the "Proposed Amendments") will give effect to the following modifications with respect to the Indenture: 

1. Allowing Eligible Receivables generated by a subsidiary of the Company incorporated in Paraguay or Bolivia to be counted toward the Eligible Receivables Collateral Required Amount.
   
   
2. Removing the requirement for a 60:40 ratio between the Property Collateral Required Amount and the Eligible Receivables Collateral Required Amount and replacing it with a requirement that the Eligible Receivables Collateral Required Amount be at least 50% of the principal amount Outstanding of the Notes as of the date of determination (while retaining the requirement that the sum of the nominal value of the receivables collateral and the fair market value of the real estate property and equipment collateral be at all times equal or exceed the outstanding principal amount of the Notes).
   
   
3. Allowing a portion of the cash proceeds from an issuance of Additional Notes deposited in the Collections Account to count toward the Eligible Receivables Collateral Amount, with such funds being released to the Company (or at the direction of the Company) only if the Eligible Receivables Collateral Required Amount is satisfied after giving effect to the corresponding release of funds from the Collections Account on a pro forma basis and the Company provides certain certifications and evidence to Financiera Finexpar S.A.E.C.A., as trustee under the Security Trust Agreement (the "Local Trustee") with regard to the use of such amounts for construction on or enhancements of the meat processing facility of the Guarantor in Bolivia.
   
   
4. Increasing the maximum Leverage Ratio under the "Limitation on Incurrence of Additional Indebtedness" covenant from 3.5:1.0 to 3.75:1.0 for the period from the issue date of the New Notes to January 29, 2021.
   
   
5. Amending the definition of "Permitted Indebtedness" to reduce the size of the working capital basket from US$37.5 million to US$25.0 million and provide that Indebtedness under such basket may be provided in the form of bonds, debentures, notes or similar instruments, in addition to under Credit Facilities.
   
   
6. Amending the definition of "Permitted Liens" in the Indenture to reduce baskets corresponding to the reduction in the size of the working capital basket in the definition of "Permitted Indebtedness" described above.
   
   
7. Amending the definition of "Collections Account" in the Indenture to provide that it may consist of one or more separate accounts, each of which shall form part of the Collateral.
   
   
8. Correcting a defect in the definition of "Debt Service" in the Indenture to clarify that the calculation thereunder is to be made on a consolidated basis. 
   
   
9. Correcting a defect in the definition of "Leverage Ratio" to replace an erroneous reference to "new Indebtedness" with a reference to "discharge of such Indebtedness." 

The Proposed Amendments will also include modifications of the Security Trust Agreement and other Transaction Documents as may be necessary to give effect to the intent of the amendments detailed above.

Only those holders who are direct participants in DTC on September 18, 2020 (the "Record Date") at 5:00 p.m., New York City time, will be entitled to submit a consent. Holders who acquire Notes after the Record Date will not be able to submit a consent.  The Consent Solicitation is being made on the terms and subject to the conditions set out in the Consent Solicitation Statement. The Company will pay a fee (the "Consent Payment") in an amount equal to US$3.75 for each US$1,000 of outstanding principal amount of Notes to holders of Notes whose validly delivered consent is accepted pursuant to the Consent Solicitation Statement promptly after the Effective Time (as defined below). Holders that do not deliver valid consents, or who revoke consents prior to the Expiration Time of the Consent Solicitation, will not receive the Consent Payment even if the Proposed Amendments become effective. Holders that deliver valid Consents which are accepted by the Company will not receive a Consent Payment if the Proposed Amendments are not made effective.

Identifiers for the Notes consist of CUSIP Numbers 358649 AA9 and P40568 BW9; ISIN Numbers USP40568BW95 and USP40568BW95, and Common Codes 211279079 and 211292440.

The Proposed Amendments will become effective only if valid consents from holders of not less than 90% in aggregate principal amount of the outstanding Notes have been validly delivered and accepted pursuant to the terms of the Consent Solicitation and the other conditions described in the Consent Solicitation Statement have been either satisfied or waived by the Company.  Such other conditions include the completion of the Concurrent Additional Notes Offering.

Holders representing over 80% of the outstanding principal amount of the Notes have expressed to the Company their intention to support the Proposed Amendments on the terms and conditions detailed in the Consent Solicitation Statement.

Frigorífico Concepción S.A. reserves the right in its sole discretion to reject any and all consents. The Company also reserves the right to waive or modify any term of, or terminate, the Consent Solicitation at any time and in its sole discretion, including but not limited to where it believes that the Concurrent Additional Notes Offering will not be completed after the consummation of the Consent Solicitation.

The Expiration Time for the Consent Solicitation is 5:00 p.m., New York City time, on September 29, 2020 (as such time may be extended by Frigorífico Concepción S.A. in its sole discretion, the "Expiration Time").  The "Effective Time" will be such time following the receipt of the Requisite Consents when the Supplemental Indenture, the Amended Security Trust Agreement and any other amendments to the Transaction Documents as required in order to give effect to the intent of the Proposed Amendments will be executed, subject to the satisfaction of the conditions precedent.  The Effective Time is expected to occur within approximately five business days after the Expiration Time, after receipt of the Requisite Consents.

Capitalized terms used but not defined in this communication have the meanings specified in the Consent Solicitation Statement.

This announcement is for informational purposes only and is not a solicitation of consents of any holders of Notes. The solicitation of consents of holders is only being made pursuant to the Consent Solicitation Statement. Holders of 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.

Oppenheimer & Co. Inc. is the Solicitation Agent in connection with the Consent Solicitation. Global Bondholder Services Corporation is the Information and Tabulation Agent in connection with the Consent Solicitation.

NONE OF THE SOLICITATION AGENT, THE TRUSTEE, THE COLLATERAL AGENT, THE INFORMATION AND TABULATION AGENT NOR ANY OF THEIR RESPECTIVE DIRECTORS, EMPLOYEES, AFFILIATES, AGENTS OR REPRESENTATIVES MAKES ANY RECOMMENDATION AS TO WHETHER HOLDERS SHOULD DELIVER CONSENTS TO THE PROPOSED AMENDMENTS PURSUANT TO THE 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 is:

Global Bondholder Services Corporation
65 Broadway ? Suite 404
New York, New York 10006
Attn: Corporate Actions
Banks and Brokers call: +1 212 430-3774
Toll free: +1 866-470-4200
By facsimile:
(For Eligible Institutions only):
+1 212 430-3775/3779
Confirmation:
+1 212 430-3774
Email: [email protected]

Any questions regarding the terms of the Consent Solicitation should be directed to the Solicitation Agent or the Information and Tabulation Agent at their respective addresses and telephone numbers set forth on this communication. If you have any questions about how to deliver a consent in the Consent Solicitation, you should contact the Information and Tabulation Agent. Requests for additional copies of the Consent Solicitation Statement or any other related documents may also be directed to the Information and Tabulation Agent.

The Solicitation Agent for the Consent Solicitation is:

Oppenheimer & Co. Inc.
85 Broad Street
New York, New York 10004
Attention: Debt Capital Markets
+1 212 667-7424

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Frigorífico Concepción S.A.
Ruta Cnel. Rafael Franco, Camino Aeropuerto Km. 6.5
Concepción
Paraguay

This announcement does not constitute an offer to sell or a solicitation of an offer to buy securities, and there shall be no sale of securities in any jurisdiction in which any offer, solicitation or sale would be unlawful prior to registration or qualification of such securities under the securities laws of any such jurisdiction. This announcement is not an offer for sale of any securities in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended. Frigorífico Concepción S.A. has not registered and does not intend to register any portion of any offering in the United States or to conduct a public offering of any securities in the United States.

SOURCE Frigorífico Concepción S.A.