NEW YORK, Nov. 10, 2020 /PRNewswire/ — A committee of institutional investors (the “Committee”), the members of which collectively hold in excess of 45% of the outstanding Notes issued by the Province of Entre Rios (the “Province”), recently retained White & Case LLP to assist in connection with the Committee’s evaluation of a potential debt restructuring of the Province. In October, the members of the Committee entered into Non-Disclosure Agreements to begin restructuring discussions with the Province.
Upon commencing discussions, the Province made a proposal for the restructuring of the Notes, which the Committee informed the Province was inadequate and neither reflective of the true payment capacity of the Province nor tailored to address its near term needs. The Committee has expressed its willingness to work with the Province with respect to its current financial challenges, including the impact of Covid-19. However, the fiduciary responsibilities of the members of the Committee to their respective investors requires that any relief be narrowly tailored to address the Province’s near-term needs. In that regard, the Committee notes that the Province is one of the least-indebted provinces in Argentina.
The Committee provided the Province with a formal response to its proposal, which set out three guiding principles that should govern any restructuring of the Province’s debt: (i) all unpaid accrued interest to be settled in full at contractual rates at settlement; (ii) the interest on the Notes during an interim relief period should be paid in cash at a rate that is no less than 5%; and (iii) following the interim relief period, the interest on the Notes should return to the contractual rate of 8.75% unless the Province is able to provide collateral to enhance the credit profile of the Notes.
Rather than engage with the Committee, the Province broke off discussions and published the terms of its rejected proposal. The Committee remains ready and willing to engage with the Province constructively to reach agreement on a restructuring that reflects the Province’s actual payment capacity. In the absence of constructive engagement by the Province, however, the Committee will be forced to pursue alternative approaches to recovery.
SOURCE White & Case LLP