The City of Córdoba Announces Commencement of Consent Solicitation

CÓRDOBA, Argentina, Oct. 28, 2020 /PRNewswire/ --

The City of Córdoba (the "City") announced today that it is seeking to modify the terms of U.S.$150 million of its 7.875% Notes due 2024 (the "Securities") and to that end it has commenced a solicitation of consents from eligible holders to amend the Securities and its indenture (the "Consent Solicitation"). The terms and conditions of the Consent Solicitation are described in the consent solicitation statement dated today (the "Consent Solicitation Statement").

Throughout its debt restructuring process, the City engaged in good faith with the holders of the Securities, providing information with transparency and seeking to adjust the terms of its outstanding debt while respecting inter-creditor equity. On October 28, 2020, the City executed a support agreement with certain funds affiliated with Moneda Asset Management (collectively, "Moneda") which in the aggregate hold a significant portion of the outstanding principal amount of the Securities. Subject to terms and conditions contained in the support agreement, Moneda has expressed to the City its support for the restructuring of the Securities as set forth in the Consent Solicitation Statement and committed to consent to the Proposed Amendments and the Declaration Waiver and Rescission Waiver and Amendments (as defined below). The support agreement provides certain consent rights to Moneda for certain modifications to the Consent Solicitation and provides that the City will pay the costs and expenses of such investors up to a capped amount.

The Consent Solicitation constitutes an important step in the process required to adjust the terms of the City's outstanding debt to its diminished payment capacity and lack of access to the international financial markets. The City faces unprecedented economic challenges. The contraction of Argentina's economy over the past two years has had a direct effect on the City's economy, resulting in a severe decline in federal, provincial and municipal fiscal revenues. Most recently, the outbreak of the COVID-19 pandemic crisis is contributing to the significant deterioration of the City's fiscal results, as its revenues become rapidly insufficient to cover its expenditures related to essential services and programs. All of the abovementioned factors have compromised severely the City's ability to meet its domestic and foreign financial obligations.

Summary of the Consent Solicitation

Proposed Amendments

Pursuant to the Consent Solicitation, by tendering their consents, Holders (as defined below) will authorize and instruct the trustee under the Indenture (the "Trustee") to modify the outstanding Securities and the Indenture. If approved, the proposed amendments will give effect to the following amendments (the "Proposed Amendments"):

• extend the maturity date from March 29, 2024 to September 29, 2027;
• make the accrued interest payment on the Securities as a payment in kind ("PIK") as follows: 69% of the accrued coupon of 7.875% outstanding from March 29, 2020, through but excluding September 29, 2020 (the "Last Coupon Period PIK"), and 100% of the accrued coupon of 7.875% outstanding from September 29, 2020, through but excluding the Effective Date ("Current Coupon Period PIK", together with the Last Coupon Period PIK, the "Aggregate PIK"), calculated according to the rounding convention set forth below, which amounts will be added to the outstanding principal amount of U.S.$150,000,000; the Aggregate PIK will be announced on the Effective Date and will increase the total principal amount, which aggregate amount will accrue interest at the coupon rates set forth in Table B below;
• establish a new amortization schedule for the Securities beginning March 29, 2024 as set forth in Table A below; and
• change the coupon of the Securities from a 7.875% fixed rate to a step-up coupon schedule with semiannual interest payments starting on September 29, 2021 and ending on September 29, 2027, which interest shall be accrued on the outstanding principal of the Securities (as increased by the Aggregate PIK), as set forth in Table B below.

The Last Coupon Period PIK and Current Coupon Period PIK for each individual Holder will be summed and then rounded down to the nearest integral of U.S.$1,000.  No cash or other consideration will be paid on PIK amounts rounded downwards. After such rounding for each individual Holder, each individual Holder's PIK payment will be aggregated to calculate the Aggregate PIK.

Consent Consideration 

Holders of the Securities whose validly delivered consent is accepted and not revoked pursuant to this Consent Solicitation Statement will be eligible to receive a cash payment of 31% of the interest accrued and unpaid under the Securities (prior to giving effect to the Proposed Amendments) from March 29, 2020, to and excluding September 29, 2020 on a pro rata basis in accordance with their respective holdings of Securities as to which consents have been validly delivered and accepted (the "Consent Consideration"); provided that the City has received the Requisite Consents and the Proposed Amendments become effective with respect to the Securities. Subject to the foregoing, the Consent Consideration will be paid on the Effective Date. No interest will be paid on the Consent Consideration. The Consent Consideration will not be subject to rounding as it is paid in cash.

Declarations of acceleration and rescission of acceleration

On September 29, 2020, the City announced that it was not making the payment of interest due September 29, 2020 on the Securities and was availing itself of the 30 day grace period set forth in the Indenture. Since the grace period expires on October 29, 2020, which occurs during the pendency of the Consent Solicitation, an Event of Default due to the failure to make such interest payment is likely to occur during the Consent Solicitation. As described above, such accrued and unpaid interest will be paid through the Consent Consideration and as a PIK, subject to the conditions set forth in the Consent Solicitation Statement.

By submitting its consent, each Holder agrees that until the earlier of the time at which the Proposed Amendments are effective and the time at which the Consent Solicitation is terminated or the Consent delivered by such Holder is revoked in accordance with the terms hereof it shall not, as a result of the expected payment default of interest due on September 29, 2020, declare the Securities to be due and payable, and shall not provide notice to the City and the Trustee of any such declaration of acceleration of the Securities (the "Declaration Waiver"). The Declaration Waiver will become effective as to each Holder when such Holder's Consent is validly delivered and accepted pursuant to this Consent Solicitation Statement. 

In addition, if the Securities have been accelerated on or before the Effective Date, by submitting its consent and for so long as such consent is not revoked in accordance with the terms hereof, each consenting Holder shall be deemed to (the "Rescission Waiver and Amendments"): (i) consent to a rescission and annulment of such acceleration, effective as of the Effective Date and any amendments to the Indenture that may be required to effectuate such rescission and annulment, (ii) consent to, with respect to such acceleration, an amendment of the Event of Default provisions in the Securities and the Indenture to delete the requirement that all payment defaults thereunder be cured (or sums be deposited with the Trustee sufficient to pay all amounts of principal and interest on all of the Securities), waived or otherwise remedied as a condition to any rescission and annulment of acceleration, and (iii) waive any other defaults that may have occurred under the Securities on or prior to the Effective Date that might otherwise interfere with the effectiveness of such rescission and annulment of acceleration and consent to any amendments to the Indenture that may be required to effectuate  such waiver of any other such defaults that may have occurred under the Securities on or prior to the Effective Date that might otherwise interfere with the effectiveness of such rescission. The effectiveness of the Rescission Waiver and Amendments is conditioned on the delivery and acceptance of the Requisite Consents pursuant to this  Consent Solicitation Statement.

The consent for the Declaration Waiver and the Rescission Waiver and Amendments is not separate from the consent for the Proposed Amendments; accordingly, by consenting to the Proposed Amendments, each Holder consents to the Declaration Waiver and the Rescission Waiver and Amendments. Likewise, if any consenting Holder revokes its consent in accordance with the terms hereof, the Declaration Waiver and the Rescission Waiver and Amendments of such consenting Holder shall also be revoked.

General mechanics of the Consent Solicitation

The Supplemental Indenture, the Proposed Amendments and the Rescission Waiver and Amendments will become effective only if valid consents from Holders of more than 75% of the outstanding principal amount of the Securities (the "Requisite Consents") have been validly delivered and accepted pursuant to the terms of this Consent Solicitation Statement, and the other conditions described in this Consent Solicitation Statement have been satisfied.  

The Proposed Amendments and the Rescission Waiver and Amendments will become effective only if the Requisite Consents are validly delivered and accepted and the other conditions described in the Consent Solicitation Statement have been satisfied, and upon the execution of a supplemental indenture to render the Proposed Amendments effective ("Supplemental Indenture"). The Declaration Waiver will become effective as to each Holder when such Holder's consent is validly delivered and accepted pursuant to the Consent Solicitation Statement.

The City reserves the right in its sole discretion to reject any and all consents with respect to any Securities which have not been validly delivered.

If we receive the Requisite Consents with respect to the Proposed Amendments and the other conditions to the effectiveness of the Proposed Amendments are met, then those Proposed Amendments and the Rescission Waiver and Amendments will be conclusive and binding on all Holders, whether or not they have consented to the Proposed Amendments. In this event, the economic terms of such holder's modified Securities will differ significantly from the economic terms applicable to its Securities prior to the effectiveness of the Proposed Amendments.

Holders can deliver their consents under the Consent Solicitation until 5:00 p.m., Central European Time, on November 10, 2020 (the "Expiration Time") unless such date and time are extended by the City in its sole discretion to a date no later than December 28, 2020.

Promptly after the Expiration Time and in no event later than 5 days business days after the date on which the City and the Trustee execute the Supplemental Indenture (the "Effective Date"), the Proposed Amendments and the Rescission Waiver and Amendments will become effective, and the City will pay the Consent Consideration due to Holders whose validly delivered Consent is accepted and not revoked pursuant to the Consent Solicitation; provided that if the effective date does not occur on or before December 28, 2020 (the "Settlement Deadline"), the Consent Solicitation will terminate.

Limited Circumstances for Revocation of Consents

Consents once given may not be revoked, except in limited circumstances where the City makes a change (other than Permitted Amendments (as defined in the Consent Solicitation Statement)) to, or waive a condition of, the Consent Solicitation, or otherwise are required to do so by law, in each case as determined by the City in its sole discretion.

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The City has engaged Santander Investment Securities Inc. to act as solicitation agent (the "Solicitation Agent") for the Consent Solicitation. Global Bondholder Services Corporation is acting as the information and tabulation agent (the "Information and Tabulation Agent"). Any questions or requests for assistance regarding the Consent Solicitation may be directed to the Solicitation Agent or the Information and Tabulation Agent at the contact information set forth below.

Holders, or custodians for such holders, of Securities may obtain a copy of the Consent Solicitation Statement by contacting the Information and Tabulation Agent at the contact information set forth below.            

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Table A

New Amortization Schedule

Table B

New Step-Up Coupon of the Securities

***

This announcement is for informational purposes only and is not an invitation or a solicitation of consents of any holders of Securities. The consent solicitation is only being made pursuant to the Consent Solicitation. Holders of Securities should read the Consent Solicitation Statement carefully prior to making any decision with respect to delivering their consents because they contain important information.

The City will make (or cause to be made) all announcements regarding the Consent Solicitation by press release in accordance with applicable law.

The City has not registered and do not intend to register this Consent Solicitation or the Securities under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities law. The consents may not be solicited in the United States or to any U.S. persons and are being solicited only outside the United States to holders of Securities other than "U.S. persons" (as defined in Rule 902 under the Securities Act) and who are not consenting for the account or benefit of a U.S. person, in offshore transactions in compliance with Regulation S under the Securities Act. Only holders of Securities who have returned a duly completed eligibility letter (available on the website of the Information and Tabulation Agent, at https://gbsc-usa.com/eligibility/cordoba) certifying that they are within one of the categories described in the immediately preceding sentence (the "Holders") are authorized to receive and review this Consent Solicitation Statement and to participate in the Consent Solicitation.

NONE OF THE SOLICITATION AGENT, THE TRUSTEE, THE INFORMATION AND TABULATION AGENT NOR ANY OF THEIR RESPECTIVE DIRECTORS, EMPLOYEES, AFFILIATES, AGENTS OR REPRESENTATIVES MAKES ANY RECOMMENDATION AS TO WHETHER HOLDERS SHOULD DELIVER THEIR CONSENTS PURSUANT TO THE CONSENT SOLICITATION, AND NO ONE HAS BEEN AUTHORIZED BY ANY OF THEM TO MAKE SUCH A RECOMMENDATION. EACH HOLDER MUST MAKE ITS OWN DECISION AS TO WHETHER TO CONSENT THE PROPOSED AMENDMENTS.

The Consent Solicitation Statement will be available from the Information and Tabulation Agent.

The Information and Tabulation Agent for the Consent Solicitation is:

Global Bondholder Services Corporation
65 Broadway – Suite 404
New York, New York 10006
Attn: Corporate Actions
Banks and Brokers call: (212) 430-3774
Toll free (866)-470-3800
By facsimile:
(For Eligible Institutions only):
(212) 430-3775/3779
Confirmation:
(212) 430-3774
Email: [email protected]

Any questions regarding the terms of the Consent Solicitation should be directed to the Solicitation Agent or the Information and Tabulation Agent at their respective addresses and telephone numbers set forth on this communication. If you have any questions about how to tender your Securities in the Consent Solicitation, you should contact the Information and Tabulation Agent. Requests for additional copies of the Consent Solicitation Statement, the eligibility letter or any other related documents may also be directed to the Information and Tabulation Agent.

The Solicitation Agent for the Consent Solicitation is:

Santander Investment Securities Inc.
45 East 53^rd Street
New York, NY 10022
United States
Attention: Debt Capital Markets Americas|

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The City of Córdoba
Secretaría de Economía y Finanzas
Calle Marcelo T. de Alvear 120 2º   Piso,
X5000KGQ — Ciudad de Córdoba, Córdoba, Argentina
Attention: Diego Miguel Bono (Dirección General de Finanzas)
Tel/Fax: +54 351 4 285-600 ext. 1206.

SOURCE The City of Cordoba

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