General Shopping Brasil enhances PIK offer to swap out 12% perpetuals

By Susanna Moon

Chicago, July 20 – General Shopping Brasil SA announced changes to subsidiary General Shopping Investments Ltd.’s private exchange offer for its $150 million principal amount of 12% perpetual subordinated fixed-to-floating notes with interest deferral option.

General Shopping has extended the early tender deadline to coincide with the offer expiration and has increased the exchange compensation, according to a company announcement.

As announced July 6, the issuer is offering to swap out the 12% perpetuals with newly issued dollar-denominated 10%/12% senior secured pay-in-kind toggle notes due 2026.

General Shopping also raised the maximum issue amount to $39 million from $30 million in the exchange.

The total exchange value will now be $260 principal amount of new notes and one Global Depositary Share, each Global Depositary Share representing 73 common shares of the company, for each $1,000 principal amount of notes tendered for exchange.

The exchange amount was lifted from $200 principal amount of new notes and one Global Depositary Share, each Global Depositary Share representing 55 common shares of the company, per $1,000 of notes exchanged.

Originally, those who tendered after 5 p.m. ET on July 18, the original early tender date, would have received the exchange amount of $190 principal amount of new notes and one Global Depositary Share per $1,000 principal amount.

The exchange will continue until 11:59 p.m. ET on Aug. 1, with settlement following on Aug. 10.

The issuer will not pay accrued interest.

Notes must be tendered in minimum denominations of $2,000 and integral multiples of $1,000 after that. However, the aggregate principal amount of new notes issued to each holder in exchange for tendered notes will be rounded down if needed to $2,000 or the nearest whole multiple of $1,000 after that. This rounded down amount will be the principal amount of new notes that holders will receive and no additional cash will be paid in lieu of new notes. Similarly, the number of Global Depositary Shares issued may be rounded down to the nearest whole share and no additional cash will be paid in lieu of any fractions.

As a result of the terms, holders are required to tender a minimum principal amount of $8,000 of notes in order to receive the exchange amount. The amount was revised to reflect the payment revisions.

Tendered notes may no longer be withdrawn, as of 5 p.m. ET on July 18, the original early deadline.

The exchange is contingent upon the exchange of at least 80% of the outstanding aggregate principal amount of the existing notes.

The offer is being made only to qualified institutional buyers under Rule 144A or non-U.S. persons under Regulation S.

The new notes will be guaranteed by General Shopping Brasil and by Levian Participacoes e Empreendimentos Ltda. and Vul Administradora e Incorporadora Ltda. as well as by Global Depositary Shares, each share representing 55 common shares of the company.

The new notes will be secured by a second ranking mortgage over part of the interest of Vul Administradora e Incorporadora Ltda. in the real estate registered with the second real estate, titles and deeds and corporate registry office of Guarulhos. The new notes will be senior to the existing notes, which are unsecured subordinated obligations, and to all of our existing and future unsecured debt to the extent of the value of the collateral securing the new notes.

D.F. King & Co., Inc. (866 620-2538, 212 269-5550 or e-mail gs@dfking.com) is the information and exchange agent. Banco Bradesco BBI SA, HSBC Securities (USA) Inc., Itau BBA USA Securities, Inc., BofA Merrill Lynch and Santander Investment Securities Inc. are the dealer managers.

General Shopping is based in Sao Paulo and operates shopping malls.

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