From the oil company they affirm that the market reacted “very positively” to the exchange proposal. Along these lines, their bonds rose
The oil company YPF presented to the market on Monday an improvement in its offer to the debt swap that it launched at the beginning of the month to extend the maturity of its Negotiable Obligations by US $ 1,000 million, a commitment that it should initially face in March 2021.
According to what the company communicated to the National Securities Commission (CNV), the expanded proposal offers better sweeteners for early policyholders with a higher cash payment and an increase in initial amortizations, in addition to extending the term of membership. .
Company sources explained that since the exchange offer was announced on July 2, “the market reacted very positively”, which was reflected in a rise in the prices of international bonds issued by YPF in both 2021 and the rest of the curve, particularly 2024 and 2025.
Thus, within the framework of a “constructive dialogue with investors”, the company considered it appropriate “an improvement that could result in a greater degree of participation” in the exchange that was reflected in the addendum presented today.
How is the new YPF proposal
In this sense, the improved proposal includes an adjustment in the amortization structure that would go from a semi-annual scheme (beginning in September 2021, instead of the previously announced annual scheme that began in March 2022.
Thus, the new bonds will maintain the original terms proposed to 2025, the same interest rate of 8.5% but will be amortized in eight semi-annual installments, starting on September 23, 2021, instead of the four annual installments scheduled for close of the first quarter of 2022.
Also included this Monday was an increase in cash payment for investors entering the early stage (early bird) by passing the proposal of $ 100 in cash and $ 950 in new bonds for every 1,000 bonds delivered., to a new combination of $ 125 in cash and $ 925 in new bonds.
While those who enter the swap in the second term – between July 17 and 30 – will receive an effective payment of $ 50, and the same bonus for $ 950, that is, the same original conditions.
Finally, the expiration of the early bird was run one day to give the market time to react to the new terms, which passed from July 16 to July 17, at 5 pm in New York, so it is expected that the date of early settlement would now occur around July 21.
After the announcement to the CNV, a positive reaction from the market was seen again with significant increases in the prices of the bonds, with the understanding that these changes will end up encouraging investors to adhere to the exchange of their bonds maturing in 2021.
What YPF is looking for with its debt restructuring
Refinancing this maturity early will allow the company to “improve financing costs and have a lower risk of refinancing for the rest of the short-term maturities“they explained in YPF.
Also, it should allow the oil company to gradually resume a path of greater activity to normalize the company’s operations that were affected by the effects of the coronavirus pandemic.
The addendum to the exchange offer confirmed that creditors who have already submitted offers will be eligible for amendments.
The economic downturn caused by the pandemic affected the company.
With this exchange, the new management of the company carried out by the CEO Sergio Affronti will seek to clear the most important maturity that the company faces from the financial horizon, at a time when theOil activity is compromised by the impact of the coronavirus pandemic.
The proposal that YPF unveiled at the beginning of the month, will require an acceptance floor of 70% of the holders of these obligations.
These instruments would be issued in exchange for the class XLVII negotiable obligations delivered on March 23, 2016 for a nominal value of US $ 1,000 million and outstanding with maturity in 2021.
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