Mexico's Vitro begins tender, exchange offers for three note series

By Angela McDaniels

Tacoma, Wash., Nov. 1 - Vitro, SAB de CV announced the beginning of a tender offer, an exchange offer and a consent solicitation for its $300 million of 8 5/8% senior notes due 2012, $216 million of 11¾% senior notes due 2013 and $700 million of 9 1/8% senior notes due 2017.

Vitro and subsidiary Administracion de Inmuebles Vitro, SA de CV are offering to purchase the notes for cash. Vitro is offering to exchange the notes and soliciting consents to an in-court restructuring under Mexican Bankruptcy Law, according to a T-3 filing with the Securities and Exchange Commission.

Holders may tender their notes either in the tender offer or in the exchange offer and consent solicitation.

Both offers will expire at 9 a.m. ET on Dec. 1.

Tender offer

In the tender offer, the company is offering to purchase the maximum principal amount of notes that it can for $100 million.

The price paid will be the same for each note series and will be determined through a modified Dutch auction. The acceptance bid price range is $500 to $575 per $1,000 principal amount of notes.

Holders will not receive any payment for accrued interest.

The notes may be subject to proration.

Because the size of the tender offer is limited, holders who tender must specify whether they elect to tender their notes into the exchange offer if they are not accepted in the tender offer.

The tender offer is not conditioned on any minimum amount of notes being tendered.

The company expects to fund the tender offer with a loan to Administracion de Inmuebles Vitro from Fintech Investments Ltd. Any notes accepted in the tender offer will be delivered to Fintech as payment for the loan. Fintech will be able to tender these notes in the exchange offer.

Exchange offer, consent solicitation

Under the restructuring plan, the company is proposing to exchange all of the old notes, $239.8 million of claims relating to derivative financial instruments and the group's other debt - which total $1.52 billion - for the following on a pro rata basis:

• $850 million principal amount of new notes due 2019;

• $100 million principal amount of newly issued mandatory convertible debentures, which will mandatorily convert into 15% of Vitro's equity on a fully diluted basis if not paid in full at maturity or upon the occurrence of certain events of default;

• A cash payment in an amount equal to the unpaid portion of $75 million in cash held in a Mexican trust after the making of the consent payment; and

• A cash restructuring fee, which will based on the issue date of the new notes.

Accordingly, for every $1,000 principal amount of the restructured debt exchanged, holders will be entitled to receive:

• $561 principal amount of new 2019 notes;

• $66 principal amount of new convertibles;

• A pro rata portion of the restructuring cash payment; and

• A pro rata portion of the restructuring fee.

Holders who consent to the restructuring plan will receive a consent payment of 5% to 10% of par.

The company noted that it may proceed with the plan even if it does not receive consents.

The new notes will carry an interest rate of 8%. The coupon will be payable entirely in cash or half in cash and half in kind through Dec. 31, 2013.

The principal of the new notes will be payable in semiannual installments of $12.5 million beginning June 30, 2015.

The new convertibles will carry a 10½% coupon, payable in kind.

The new notes and convertibles will be callable under certain circumstances. They will be mandatorily redeemed if their yield to maturity, based on the average closing trading prices of the new notes during the 20 business days immediately preceding the receipt of the proceeds from any issuance of capital stock is higher than 9%. In this case, the company must apply 25% of the cash proceeds from that stock issuance to either prepay or redeem the new notes and/or the remaining new convertibles at par or repurchase the new notes through market purchases.

Tenders in the tender offer and exchange offer are irrevocable.

The depositary for the tender offer and the information and exchange agent for the exchange offer is D.F. King & Co., Inc. (banks and brokers call 212 269-5550, others call 800 431-9633).

Vitro is a Nuevo Leon, Mexico-based glass manufacturer.

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