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The Province of La Rioja Announces Commencement of Consent Solicitation

LA RIOJA, Argentina, Sept. 1, 2021 /PRNewswire/ — The Province of La Rioja (the “Province“) announced today that it has commenced a solicitation (the “Consent Solicitation“) of consents (“Consents“) from Eligible Holders (as defined below) to amend its 9.750% Notes due 2025 (the “Notes“) and the indenture governing the Notes (the “Indenture“). The Consent Solicitation is being made on the terms and subject to the conditions set forth in the consent solicitation statement dated August 31, 2021 (the “Consent Solicitation Statement“).

Certain bondholders that have represented to hold approximately 63.7% of the principal amount of the Notes outstanding have agreed with the Province to support the terms of the Consent Solicitation as set forth in the Consent Solicitation Statement by providing their Consents to the Proposed Amendments (as defined below) and, subject to the effectiveness of the Proposed Amendments, withdraw (or cause to be withdrawn) their claims seeking a judgment against the Province filed on April 22, 2021 in the United States District Court for the Southern District of New York

The following table sets forth certain information relating to the Notes:

Series of Notes

ISIN

CUSIP

Principal Amount

Outstanding

Minimum

Denomination

 9.750% Notes due 2025

144A:

US504216AA09

144A:

504216 AA0

U.S.$300,000,000

U.S.$150,000 /

U.S.$1,000



Reg S:

USP6S52BAA07

Reg S:

P6S52B AA0

Terms of the Consent Solicitation

Pursuant to the Consent Solicitation, by tendering their consents, Eligible Holders will authorize and instruct the trustee for the Notes (the “Trustee“) to modify the Notes and the Indenture.

If the Requisite Consents (as defined below) are obtained, the other conditions to the effectiveness of the Proposed Amendments (as defined below) are satisfied or waived (where possible), and the Supplemental Indenture (as defined below) becomes effective, it will be binding on all holders of Notes whether or not they delivered a consent to the Proposed Amendments. In this event, the economic terms of such holder’s modified Notes will differ significantly from the economic terms of its Notes prior to the effectiveness of the Proposed Amendments.

The Consent Solicitation will expire at 5:00 p.m. (New York City time) on September 21, 2021, unless extended or earlier terminated by the Province in its sole discretion (the “Expiration Time”). Consents may not be revoked at any time, except in the limited circumstances described in the Consent Solicitation Statement.

Promptly after the Expiration Time and the date on which the results of the Consent Solicitation and the aggregate principal amount of additional Notes to be received by Consenting Holders (as defined below) on the Settlement Date (as defined below) reflecting rounding (the “Aggregated PIK Amount“) will be announced, the Province expects that (i) the Province and the Trustee will execute a supplemental indenture to the Indenture amending the Notes (and any relevant provisions of the Indenture) in order to give effect to the Proposed Amendments (the “Supplemental Indenture“), (ii) the Province will pay the Cash Consent Consideration (as defined below) due to Eligible Holders whose consents have been accepted pursuant to the terms of the Consent Solicitation (“Consenting Holders“), (iii) the Province will deliver the PIK Consent Consideration (as defined below) due to Consenting Holders, and (iv) the Proposed Amendments will become effective upon payment of the Consent Consideration (as defined below) to Consenting Holders (the “Settlement Date“).

Summary of the Proposed Amendments

If the consent from Eligible Holders of more than 75% (U.S.$225,000,000) in aggregate principal amount of outstanding Notes (the “Requisite Consents“) are obtained and the other conditions to the Consent Solicitation are satisfied or, as applicable, waived, the Province will execute the Supplemental Indenture and take any other actions necessary to give effect to the amendments to the Indenture and the Notes described below (the “Proposed Amendments“):

(i)  extend the maturity date of the Notes until February 24, 2028;

(ii)  amend the amortization schedule of the Notes to nine semi-annual installments as follows, expressed as a percentage of the aggregate outstanding principal amount of the Notes on the Settlement Date, including the Aggregated PIK Amount (as adjusted ratably from time to time for further issues, repurchases and redemptions of Notes):

Payment Date

Principal Amount Payable

February 24, 2024

5.0%

August 24, 2024

11.875%

February 24, 2025

11.875%

August 24, 2025

11.875%

February 24, 2026

11.875%

August 24, 2026

11.875%

February 24, 2027

11.875%

August 24, 2027

11.875%

February 24, 2028

11.875%

(iii)  modify the interest rates payable on the Notes as follows:

a.  for the period from and including August 24, 2021 to but excluding February 24, 2022, the Notes will accrue interest at a rate of 3.500% per annum;

b.  for the period from and including February 24, 2022 to but excluding February 24, 2023, the Notes will accrue interest at a rate of 4.750% per annum;

c.  for the period from and including February 24, 2023 to but excluding February 24, 2024, the Notes will accrue interest at a rate of 6.500% per annum; and

d.  for the period from and including February 24, 2024 to but excluding February 24, 2028, the Notes will accrue interest at a rate of 8.500% per annum;

(iv)  irrevocably waive the right to receive any interest accrued at the original interest rate which remains unpaid and any default interest thereon through and excluding the Settlement Date, provided that the holders will have the right to receive interest accrued at the rates set forth above from August 24, 2021, with such interest being payable in arrears commencing on February 24, 2022;

(v)  modify the minimum denominations of the Notes from U.S.$150,000 and multiples of U.S.$1,000 in excess thereof, to U.S.$1.00 and multiples of U.S.$1.00 in excess thereof;

(vi)  provide in the Indenture that, with respect to the right of any holder to pursue a remedy under the Indenture or the Notes, the Province acknowledges the right of any beneficial holder of the Notes to pursue such remedy with respect to the portion of the relevant global security that represents such beneficial holder’s securities as if certificated securities had been issued to such beneficial holder;

(vii)  amend the definition of “Reserve Matter Modification” in the Indenture to include the following modifications within the scope of the same:

a.  increasing the percentage of the aggregate principal amount then outstanding required to be held by holders to declare the debt securities of such series due and payable immediately, or reducing the percentage of the aggregate principal amount then outstanding required to be held by holders to waive any existing defaults or rescind or annul any notice of acceleration and its consequences;

b.  amending the provisions of the Indenture or any series of Debt Securities (as defined in the Indenture)that govern the re-designation of series of debt securities in the context of a reserve matter modification; and

c.  amending the provisions of the Indenture or any series of Debt Securities that govern the restrictions on the Province’s ability to conduct a reserve matter modification with single aggregated voting following a reserve matter modification with two-tier voting or a restructuring exchange offer;

(viii)  irrevocably waive any requirements to publish notices to the holders in leading newspapers pursuant to Paragraph 13 of the Notes in connection with the Consent Solicitation and the execution of the Supplemental Indenture, and amend the Notes to permanently eliminate such requirements with respect to the Notes;

(ix)  amend item (viii) of the definition of “Permitted Lien” in the Indenture to correct an inconsistency;

(x)  amend the Indenture to include provisions governing the re-designation of series subject to a reserve matter modification;

(xi)  amend the Indenture to include provisions that govern the restrictions on the Province’s ability to conduct a reserve matter modification with single aggregated voting following a reserved matter modification with two-tier voting or a restructuring exchange offer; and

(xii)  replace all references to “9.75% Notes due 2025” with “Step-Up Notes due 2028.”  

By delivering a Consent, each Eligible Holder agrees with the Province to: (i) consent to the rescission and annulment of any acceleration of the Notes that may have occurred on or prior to the Settlement Date and otherwise waive the requirement that all payment defaults under the Notes shall have been cured, waived or otherwise remedied as a condition to any rescission or annulment of acceleration, (ii) instruct the Information and Tabulation Agent, on behalf of such Eligible Holder, to provide written notice to us and the Trustee of the aggregate principal amount of Notes for which Consents have been received containing the consent of the Eligible Holders to the rescission and annulment of such acceleration, (iii) waive any default or event of default that may have occurred under the Indenture and the Notes on or prior to the Settlement Date, including without limitation, any default or event of default in connection with the Province’s failure to pay interest under the Indenture and the Notes, (iv) waive and release the Province from any and all claims such Eligible Holder may have now or in the future in connection with or arising out of any such acceleration, defaults or events of default, as applicable, and acknowledge and agree that any such acceleration, defaults or events of default shall be deemed rescinded, annulled and cured, as applicable, upon the effectiveness of the Proposed Amendments and consummation of the Consent Solicitation, and (v) authorize the Province to file the appropriate documents with any administrative body, court, tribunal or other body before which any litigation or arbitral proceedings relating to the Notes, including relating to the confirmation or enforcement of any judgment, are pending or that has issued or recognized any payment order, judgment, arbitral award or other such order in respect of the Notes in order to have the proceedings withdrawn, dismissed and discontinued with prejudice.

Conditions

The Proposed Amendments will only become effective if the following conditions are met (or in the case of clause (c) only, waived by us in our sole discretion):

(a)  the Requisite Consents have been received;

(b)  the Supplemental Indenture has been executed;

(c)  the absence of any law or regulation that would, and the absence of any injunction, action or other proceeding (pending or threatened) that could, make unlawful or invalid or enjoin the implementation of the Proposed Amendments or question the legality or validity thereof; and

(d)  the payment of the Consent Consideration has been made to Consenting Holders.

Consent Consideration

If the Requisite Consents are received prior to the Expiration Time and the Supplemental Indenture is executed, an amount equal to all accrued and unpaid interest on the Notes from August 24, 2020 to, and including, August 23, 2021 (the “Accrued and Unpaid Interest“), net of certain transaction expenses incurred by the representatives of certain bondholders supporting the Consent Solicitation totaling U.S.$600,000 (the “Transaction Expenses“), will be paid on the Settlement Date in the manner described in the Consent Solicitation Statement (the “Consent Consideration“) only to Consenting Holders.

If the Requisite Consents are received on or prior to the Expiration Time and the Supplemental Indenture is executed, the Consent Consideration will be applied as follows:

  (i)  each Consenting Holder will receive their proportionate share (based on the aggregate principal amount of such holder’s Notes for which Consents were validly delivered and accepted compared to the total aggregate principal amount of Notes for which Consents were validly delivered and accepted in the Consent Solicitation) of 58% of the Accrued and Unpaid Interest minus their proportionate share of the Transaction Expenses (such aggregate amount, the “Cash Consent Consideration“) in cash on the Settlement Date; and

  (ii)  each Consenting Holder will receive an aggregate principal amount of additional Notes (as amended by the Supplemental Indenture) equal to their proportionate share (based on the aggregate principal amount of such holder’s Notes for which consents were validly delivered and accepted compared to the total aggregate principal amount of Notes for which consents were validly delivered and accepted in the Consent Solicitation) of 42% of the Accrued and Unpaid Interest, which will be subject to rounding as set forth in the Consent Solicitation Statement (the “PIK Consent Consideration“).

For the avoidance of doubt, the Cash Consent Consideration and the PIK Consent Consideration are payable on the Settlement Date in respect of accrued and unpaid interest on the Notes from August 24, 2020 through (and including) August 23, 2021.

By delivering their Consent, Eligible Holders will be deemed to have instructed the Province to pay the Transaction Expenses on the Settlement Date. For the avoidance of doubt, the Transaction Expenses will be deducted from the Accrued and Unpaid Interest to be received by Consenting Holders. The payment of the Transaction Expenses will be delivered to such account as Quinn Emanuel Urquhart & Sullivan, LLP, as counsel of certain bondholders supporting the Consent Solicitation, will notify to the Province in writing prior to the Settlement Date.

The Province reserves the right in its sole discretion to extend or amend the Consent Solicitation, and to reject any and all consents with respect to any Notes.

* * *

The Province will make (or cause to be made) all announcements regarding the Consent Solicitation by press release in accordance with applicable law.

The Province has engaged BofA Securities Inc. to act as solicitation agent (the “Solicitation Agent“) and D.F. King & Co., Inc. is acting as the information and tabulation agent (the “Information and Tabulation Agent“). Any questions or requests for assistance regarding the Consent Solicitation may be directed to the Information and Tabulation Agent at +1 (212) 269-5550 or +1 (866) 751-6313.

The Province has not registered and will not register the Consent Solicitation or the Notes under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities law. Consents are being solicited only from holders of the Notes that are: (1) “qualified institutional buyers” as defined in Rule 144A under the Securities Act or (2) outside the United States in compliance with Regulation S under the Securities Act and who are “non-U.S. qualified offerees” (as defined in the Consent Solicitation Statement), and otherwise eligible to receive this solicitation under the laws of their jurisdiction (each, an “Eligible Holder”). Only holders who have certified that they are within one of the categories described in the immediately preceding sentence via www.dfking.com/rioja (the “Consent Website“) are authorized to receive and review the Consent Solicitation Statement and to participate in the Consent Solicitation.

This announcement is for informational purposes only and is not an invitation or a solicitation of consents from any holders of Notes. The Consent Solicitation is only being made pursuant to the Consent Solicitation Statement.   Before making any decision with respect to delivering their consents, Eligible Holders should read the Consent Solicitation Statement.  Eligible Holders, or custodians for such holders, of Notes may obtain a copy of the Consent Solicitation Statement by contacting the Information, and Tabulation Agent or by download, following registration, via the Consent Website.

Eligible Holders are advised to check with any bank, securities broker or other intermediary through which they hold Notes as to when such intermediary would need to receive instructions from such Eligible Holder in order for that Eligible Holder to be able to deliver their consent before the deadlines specified herein and in the Consent Solicitation Statement. The deadlines set by any such intermediary and The Depositary Trust Company for the delivery of consents will also be earlier than the relevant deadlines specified herein and in the Consent Solicitation Statement.

* * *

NONE OF THE CONSENT SOLICITATION AGENT, THE TRUSTEE, THE INFORMATION AND TABULATION AGENT NOR ANY OF THEIR RESPECTIVE DIRECTORS, EMPLOYEES, AFFILIATES, AGENTS OR REPRESENTATIVES MAKES ANY RECOMMENDATION AS TO WHETHER ELIGIBLE HOLDERS SHOULD DELIVER THEIR CONSENTS PURSUANT TO THE CONSENT SOLICITATION, AND NO ONE HAS BEEN AUTHORIZED BY ANY OF THEM TO MAKE SUCH A RECOMMENDATION. EACH ELIGIBLE HOLDER MUST MAKE ITS OWN DECISION AS TO WHETHER TO CONSENT THE PROPOSED AMENDMENTS.

The distribution of materials relating to the Consent Solicitation may be restricted by law in certain jurisdictions. The Consent Solicitation is void in all jurisdictions where it is prohibited. If materials relating to the Consent Solicitation come into your possession, you are required by the Province to inform yourself of and to observe all of these restrictions, including whether you are a holder pursuant to the laws of your jurisdiction. The materials relating to the Consent Solicitation, including this communication, do not constitute, and may not be used in connection with, an offer or solicitation in any place where offers or solicitations are not permitted by law.

If a jurisdiction requires that the Consent Solicitation be made by a licensed broker or agent and the Solicitation Agent or any affiliate of the Solicitation Agent is a licensed broker or agent in that jurisdiction, the Consent Solicitation shall be deemed to be made by the Solicitation Agent or such affiliate on behalf of the Province in that jurisdiction. This announcement shall not constitute an offer to sell or the solicitation of an offer to buy any securities nor will there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or other jurisdiction.

Forward-Looking Statements

This announcement contains certain “forward-looking” statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements are based on current plans, estimates and projection, and therefore you should not put undue reliance on them. These statements are likely to relate to, among other things, the Province’s goals, plans and projections regarding its financial position, results of operations, expenses, performance or the outcome of contingencies such as legal proceedings, which are based on current expectations that involve inherent risks and uncertainties, including internal or external factors that could delay, divert or change any of them in the next several years. The Province undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.

Notice to Holders In the United States

The Province is making this announcement in reliance on exemptions from the registration requirements of the Securities Act.  These exemptions apply to offers and sales of securities that do not involve a public offering. The modified Notes have not been recommended by any U.S. or non-U.S. securities authorities, and these authorities have not determined that this announcement is accurate or complete. Any representation to the contrary is a criminal offense.

SOURCE The Province of La Rioja