Brazil's Odebrecht launches consent solicitation for 7% notes due 2020

By Jennifer Chiou

New York, July 16 - Odebrecht SA subsidiary Odebrecht Finance Ltd. announced the start of its consent solicitation for its $500 million of 7% senior notes due 2020.

The company is looking to amend the note indenture to delete covenants and related definitions on the limitation of debt, limitation on agreements restricting dividend payments and limitation on transactions with affiliates.

Odebrecht is also seeking consents to amend the limitation on liens covenant, certain events of default and related definitions to exclude non-significant subsidiaries and certain future project subsidiaries of Construtora Norberto Odebrecht SA.

The company is also proposing amendments to the events of default relating to the final judgment and cross acceleration by increasing the thresholds to $100 million from $50 million and to include a "substitution of issuer" provision that would allow Odebrecht Finance to be substituted as issuer by Construtora Norberto Odebrecht or any wholly owned subsidiary.

Under the terms of the indenture, the non-investment grade covenants are currently suspended and do not restrict Construtora Norberto Odebrecht and its subsidiaries because the notes have attained investment-grade ratings from two rating agencies, according to a news release.

The proposed amendments would permanently delete the non-investment grade covenants and would also conform the indenture to those of the $600 million of 5.125% notes and $400 million of 7.125% notes due 2042.

The solicitation ends at 5 p.m. ET on July 23. It is open to holders of record as of July 13.

Those who deliver consents will receive a cash payment equal to $2.50 per $1,000 principal amount of notes once a supplemental indenture has been executed.

The solicitation agents are Deutsche Bank Securities Inc. (212 250-2955 or 866 627-0391) and Goldman Sachs & Co. (212 902-5183 or 800 828-3182). The information agent is D.F. King & Co., Inc. (212 269-5550 or 800 488-8035; odebrecht@dfking.com).

Odebrecht is an engineering, construction, chemical and petrochemical conglomerate based in Salvador da Bahia, Brazil.

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