General Shopping launches tender to tackle USD exposure

miércoles 16 de septiembre de 2015 10:00 GYT

By Paul Kilby

NEW YORK, Sept 16 (IFR) - General Shopping launched a cash tender on Wednesday to buy up to US$50m of its outstanding 10% perps as it looks to reduce exposure to dollar debt.

Bond holders who tender by the early bird date of September 29 will receive US$510 per US$1,000 principal amount. Thereafter, but before the expiration date of October 14, holders get US$480.

At the same time, the board has approved an offering of common shares that will be sold in Brazil and used in part to finance the tender.

Prices on the Brazilian mall operator's bonds have tumbled in recent months amid concerns that a weakening Real would make it difficult for the company to meet dollar payments when it was largely generating local currency revenues.

This follows the issuer's decision earlier this month to trigger covenants that allowed it to defer payments on US$150m of 12% perpetual bonds.

In a statement earlier this month the company said its move to defer payment that is due on September 20 did not constitute a default. It however did not specify why it was taking such a step.

The senior 10% perps were being quoted at a mid-market price of around 44.5, marking a 45% drop from the 81.00 level seen in mid July, according to Thomson Reuters data. The 12% perps have tumbled to 25.00-30.00 from around 73.50 in mid July.

The 12% perps are one of a handful of hybrid securities issued by Latin American corporates in recent years.

That deal, which was granted 50% equity treatment by rating agencies when it was issued in 2012, allowed the company to lower its leverage ratios while proceeding with aggressive expansion plans.

Santander is acting as dealer manager on the tender and as lead on the equity sale. (Reporting By Paul Kilby; editing by Shankar Ramakrishnan)