Banco Mercantil do Brasil buys back $64.62 million 9 5/8% notes

By Toni Weeks

San Luis Obispo, Calif., July 27 – Banco Mercantil do Brasil SA said it accepted for purchase and settled a total of $64,617,000 principal amount of its 9 5/8% subordinated notes due 2020.

The company began a tender offer for the notes on June 15 that had originally been announced at $30 million in size. By the early tender date, 5 p.m. ET on June 26, the bank had received valid tenders from holders of $67,093,000 principal amount of notes. The company exercised its option to increase the tender cap to $35,654,000 and repurchased this increased amount of notes on June 30 on a pro-rata basis.

Following the increase in the cap amount, Banco Mercantil said it would accept tenders at the rate of 53.14% of the amount submitted for purchase. Tendered notes that would have resulted in a minimum denomination of new notes of less than $100,000 were rejected. In total, the issuer accepted 14.23% of the outstanding notes for purchase.

On June 29, the bank announced it was seeking approval from the Central Bank to purchase the remaining $31,439,000 of notes tendered before the early deadline. On July 14, Banco Mercantil said it was extending the expiration of the offer, which was originally 11:59 p.m. ET on July 13, in order to allow more time to receive Central Bank approval. That approval was given on July 21.

The extension pushed back the final settlement date for the offer to the earlier of two business days after receipt of approval and Aug. 3 from July 15.

As announced on June 15, Banco Mercantil offered $820 for each $1,000 principal amount of notes tendered by the early tender date. The total included an early tender premium of $30 per $1,000 principal amount.

The company also paid accrued interest to but excluding the settlement date, which was June 30 for early tendered notes and July 27 for remaining tenders.

In its initial announcement, the bank said that if the offer was oversubscribed by the early tender date it would not accept any notes after the early deadline.

The bank also said initially that it reserved its right to increase the tender cap by up to $10 million.

The dealer manager was HSBC Securities (USA) Inc. (888 HSBC-4LM or 212 525-5552).

The tender agent and information agent was D.F. King & Co., Inc. (212 269-5550, 800 398-1247, fax 212 709-3328 or mercantil@dfking.com).

Banco Mercantil is a lender based in Belo Horizonte, Brazil.

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