Transjamaican Highway gets transaction agreement, solicits consents

By Mary-Katherine Stinson

Lexington, Ky., Nov. 28 – Transjamaican Highway Ltd. secured a transaction agreement to affect changes in its toll road operation and maintenance structure and launched a related consent solicitation for its 5¾% senior secured notes due 2036, according to a press release.

The agreement, among operator shareholders Transjamaican, Bouygues Travaux Publics and Vinci Concessions and the operator Jamaican Infrastructure Operator Ltd., allows Transjamaican a call option to acquire the operator shareholder’s equity interests Jamaican Infrastructure.

In exchange for the call option, Transjamaican will pay Bouygues and Vinci Concessions an option price totaling $16.1 million with funds currently in deposit in the distribution account.

The transactions under the agreement are subject to the receipt of the consents and the satisfaction of other customary conditions.

Pursuant to the transaction agreement, the company will exercise the call option granted by Vinci Concessions to acquire 51% of the outstanding equity interests in the operator upon consummation of the consent solicitation.

Background

Jamaican Infrastructure has been operating and maintaining Highway 2000 East-West in Kingston, Jamaica pursuant to the operation and maintenance agreement dated September 2003. Under the terms of the agreement, Jamaican Infrastructure is entitled to receive certain compensation fees which currently include a monthly fixed operational fee and a monthly variable fee corresponding to 3% of the theoretical toll revenues.

Following the operator shareholders' grant of the call options to the company, the company and the other parties will alter the agreement to amend Jamaican Infrastructure's fee structure so that a portion of the fixed fee component is cut by 72%, and the variable fee component is increased to 5% of the theoretical toll revenues and other minor adjustments. The company stated it expects that this will result in a reduction of operating costs, an increase in EBITDA margins, higher debt service coverage ratios, and a protection of the operating margins in less favorable traffic scenarios.

Consent solicitation

To implement the transaction agreement, the company launched a consent solicitation for its notes dated as of Nov. 25 to certain proposed amendments, waivers and consents.

Specifically, the company is seeking consents for the following:

• To amend certain provisions of the indenture to provide for an increase of the operation and maintenance reserve required amount to the sum of the expected operating and maintenance costs for a six-month period from the previous three-month period;

• To amend certain provisions of the direct agreement dated Feb. 18, 2020, among the company, Jamaican Infrastructure, Vinci Concessions, Bouygues, and Bank of New York Mellon as offshore security agent;

• To amend certain provisions of an agreement among the company, Bank of New York Mellon, as offshore security agent, offshore account bank, and indenture trustee and JCSD Trustee Services Ltd., as the onshore collateral agent;

• To terminate the guarantees between the company and Bouygues and the company and Vinci Concessions, pursuant to which each operator shareholder agreed to guarantee to the company the payment obligations of Jamaican Infrastructure under the operation and maintenance agreement;

• To amend certain provisions of a concession agreement, dated Nov. 21, 2001, between the company, as concessionaire and National Road, as grantor, which amendments will only become effective upon the company's receipt of the approval of National Road on behalf of the government of Jamaica; and

• To waive certain requirements and consent to certain actions under the Indenture and the offshore security and accounts agreement.

If the proposed amendments become effective, the company intends to exercise the call option to acquire the Jamaican Infrastructure shares held by Vinci Concessions, but not the shares held by Bouygues due to restrictions in the concession agreement. The shares acquired from Vinci Concessions will become subject to a security interest in favor of JCSD Trustee Services Ltd. as onshore collateral agent.

The company requires approval from National Road to exercise its call option to purchase Bouygues' shares in Jamaican Infrastructure.

The consent solicitation will expire at 5 p.m. ET on Dec. 16.

Noteholders of record as of 5 p.m. ET on Nov. 23 who deliver valid consents by the expiration date will receive a consent payment of $1.25 in cash for each$1,000 principal amount of the notes.

Payment is expected no later than two business following the expiration date.

Noteholders who do not deliver consents by the expiration of the offer will not receive the consent fee.

If the amendments become effective, they will be binding on all noteholders.

Bank of New York Mellon is the indenture trustee, paying agent, registrar, transfer agent and calculation agent. JCSD Trustee Services Ltd. is the onshore collateral agent.

The company has engaged UBS Securities LLC (888 719-4210, 203 719-4210) to act as solicitation agent.

D.F. King & Co., Inc. (800 628-8538, 212 269-5550, tjh@dfking.com) is the information and tabulation agent for the consent solicitation.

NCB Capital Markets Ltd. is the local coordinating agent. Jamaican noteholders may reach out to NCB with any questions at 876 960-7108 or ncbcapinfo@jncb.com, Attention: Timar Jackson or Sekou Crawford.

Transjamaican develops and operates tolled highways. The company is majority owned by National Road Operating and Constructing, but the company is offering a 64% ownership in the company in the upcoming IPO.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.