Aeropuertos Argentina 2000 SA, one of the world's largest private-sector airport operators, launched a bond swap offer on Tuesday in an effort to delay debt payments amid a ban on air travel in Argentina that is reducing its revenues.
The Buenos Aires-based company, a unit of Corporación América Airports SA, is proposing to swap bonds maturing in 2027 for new bonds with the same maturity but that would allow the company to take steps that include deferring interest payments.
Bonds fell 4.7 cents to 55.81 cents on Tuesday, according to Trace bond trading data. The company sold about US$400 million of the notes in 2017, according to data compiled by Bloomberg, but has since paid off some of them.
The offer is "part of the company's plan to mitigate the impact of the unprecedented Covid-19 pandemic that has heavily impacted the global aviation sector, which lead to a drastic reduction in passenger traffic," AA2000 said in a statement on Tuesday.
Under the offer, some interest payments would be deferred, known as payments in kind, while planned principal payments would be made under a new delayed schedule, according to a statement.
The company is also seeking an agreement among the bondholders to allow the new notes to be issued on the stock exchange, and to remove restrictions for Aeropuertos Argentina 2000 known as restrictive covenants, as well as default clauses.
The swap "may well prove to be a model for a large number of Latin American companies to follow," says Roger Horn, senior emerging markets strategist at SMBC Nikko Securities America in New York.
For the swap to be valid, holders of at least 80 percent of the outstanding capital of the notes must accept it. The anticipated deadline for accepting the transaction is 5pm New York City time on May 1, and the final deadline is 11.59pm on May 18 in New York City.
To stop the spread of Covid-19, Argentina closed its borders and cancelled flights last month. Aeropuertos Argentina 2000, also known as AA2000, operates 35 airports nationwide, according to its website.
As AA2000 seeks to restructure its debt, Argentina's government is negotiating with creditors in an attempt to restructure some US$66 billion in sovereign debt.
Eduardo Eurnekian's Corporación Américawns 75.7 percent of AA2000, while the federal government has 15 percent, Italy's Gruppo SEA has 8.5 percent and local construction company Riva has 0.85 percent, according to LatinFinance.
by Ezra Fieser & Carolina Millan, Bloomberg