Axtel subsidiary begins exchange offers for 7 5/8% notes, 9% notes

By Susanna Moon

Chicago, Dec. 27 - Axtel, SAB de CV said its wholly owned subsidiary Axtel Capital, SA de CV Sofom ENR began offers to exchange any and all of Axtel's outstanding $275 million 7 5/8% senior notes due 2017 and $490 million 9% senior notes due 2019 for a combination of 7% senior secured notes due 2020, 7% pesos-denominated senior secured convertible dollar-indexed notes due 2020 and cash.

The convertible dollar-indexed notes are indexed to dollars and, unless a holder requests otherwise, payable in dollars, according to a company press release. The new notes will mature on Jan. 31, 2020 unless more than $125 million principal amount of 2019 notes is outstanding on June 22, 2019, in which case the new notes will mature on June 22, 2019.

The company also began consent solicitations to amend the notes to eliminate substantially all of the covenants other than the covenant to pay principal and interest when due and to eliminate most events of default.

The maximum amount of cash, senior secured notes and convertible dollar-indexed notes that will be issued in the exchange offers and consent solicitations is $114.8 million, $356.5 million and Ps. 335.5 million (or $26.3 million, converted into dollars at an exchange rate of Ps. 12.7777 per dollar), respectively.

The total purchase price will be $650 for each $1,000 principal amount tendered by 5 p.m. ET on Jan. 11, the early tender date. The total payment includes $466 of senior secured notes, $34 of convertible dollar-indexed notes, $50 cash and $100 consent payment. The convertible dollar-indexed portion of the payment represents about Ps. 439 principal amount of convertible dollar-indexed notes converted into dollars at the commercial exchange rate of Ps. 12.7777 per dollar reported by Banco de Mexico on Dec. 20, the release noted.

The offers will end at 11:59 p.m. ET on Jan. 28.

Holders who tender their notes will be deemed to have consented to the proposed amendments.

Tendered notes may be withdrawn by Jan. 11.

Those who tender their notes after the early deadline will receive only the tender offer base payment.

The exchange offers and consent solicitations are conditioned on the receipt of consents representing a majority of each series of notes and the concurrent completion of a sale-and-leaseback transaction with MATC Digital, S de RL de CV, a subsidiary of American Tower Corp.

In the transaction, the company is proposing to sell 890 telecommunications sites to MATC Digital for $250 million. MATC would then lease space on these telecommunications sites back to Axtel.

D.F. King & Co., Inc. (800 967-4612, collect at 212 269-5550 or axtel@dfking.com) is the information agent.

The exchange offers are being made only to qualified institutional buyers under Rule 144A or accredited investors under Rule 501(a) or to those who are not U.S. persons under Rule 902.

Axtel is a fixed-line integrated telecommunications company based in San Pedro Garza Garcia, Mexico.

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