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AG International Announces Commencement Of A Private Offer To Exchange Any And All Outstanding 4.000% Senior Notes Due 2018 For Cash And Newly Issued 11.000% Senior Secured Notes Due 2021 Or For All New Newly Issued 11.000% Senior Secured Notes Due 2021 And Solicitation Of Consents To Proposed Amendments To The Related Indenture

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AG International Announces Commencement Of A Private Offer To Exchange Any And All Outstanding 4.000% Senior Notes Due 2018 For Cash And Newly Issued 11.000% Senior Secured Notes Due 2021 Or For All New Newly Issued 11.000% Senior Secured Notes Due 2021 And Solicitation Of Consents To Proposed Amendments To The Related Indenture

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BELO HORIZONTE, Brazil, July 19, 2018 /PRNewswire/ -- Andrade Gutierrez International S.A. ("AG International", or the "Issuer") announced today the commencement of a private offer (the "Exchange Offer") to Eligible Holders (as defined below) of the outstanding 4.000% Senior Notes due 2018 (the "Old Notes") issued by AG International to exchange Old Notes for cash and newly issued 11.000% Senior Secured Notes due 2021 (the "New Notes") or for all New Notes. The New Notes will be guaranteed (the "Guarantee") by Andrade Gutierrez Engenharia S.A. (formerly known as Construtora Andrade Gutierrez S.A) ("AG Engenharia"), Andrade Gutierrez Investimentos em Engenharia S.A. ("AGIE"), and AG Construções e Serviços S.A. ("AGCS"). The New Notes will also be guaranteed up to US$50 million by Zagope SGPS S.A. ("Zagope" and, together with AG Engenharia, AGIE and AGCS, the "Guarantors"), and the New Notes and the Guarantee will be secured by the Collateral (as defined below). Concurrently with the Exchange Offer, AG International commenced a solicitation of consents (the "Consent Solicitation" and, together with the Exchange Offer, the "Exchange Offer and Consent Solicitation") from Eligible Holders of Old Notes to certain proposed amendments that would eliminate certain covenants and events of default provisions of the indenture under which such Old Notes were issued (the "Proposed Amendments").

The table below summarizes certain payment terms for the Old Notes:

Title of Security

CUSIP/ISIN
Number

Aggregate Principal
Amount Outstanding

Exchange
Consideration(1)(2)

Early Participation
Premium(1)

Total Exchange
Consideration(1)(3)

4.000% Senior
Notes due 2018

03439T AA9;
L01795 AA8;

US03439TAA97;
USL01795AA80

US$344,706,000 
million

US$1,000 in New
Notes or, for electing
Early Participants (as
defined below),
US$1,000 in Cash
Consideration (as
defined below)
and New Notes

US$15 in New Notes

US$15 in New Notes
plus, depending on the
Early Participant's
election, either
US$1,000 in Cash
Consideration and
New Notes or

US$1,000 in New
Notes

(1)   Per US$1,000 principal amount of Old Notes.

(2)   Consists of the consideration payable to Eligible Holders who validly tender (and do not validly withdraw) their Old Notes after the Early Participation Time (as defined below) but at or prior to the Expiration Time (as defined below), not including accrued and unpaid interest on the Old Notes, which will be paid in New Notes.

(3)   Consists of the consideration payable to Eligible Holders who validly tender (and do not validly withdraw) their Old Notes at or prior to the Early Participation Time (as defined below), not including accrued and unpaid interest on the Old Notes.


The New Notes and the Guarantee will be secured by certain collateral in accordance with Brazilian law, consisting of (i) a fiduciary assignment (alienação fiduciária) to be granted by AGIE over outstanding common shares (and their corresponding economic rights) of AG Engenharia that are owned by AGIE, currently representing 99.99% of the total outstanding common stock of AG Engenharia (the "AGE Collateral"), which will be effective immediately upon execution of a certain Shares Fiduciary Assignment Agreement and Other Covenants (Contrato de Alienação Fiduciária de Ações e Outras Avenças) to be entered into by and between the Issuer, AGIE, AG Engenharia and the collateral agent on behalf of the holders of the New Notes (the "AGE Collateral Agreement") and (ii) a conditional fiduciary assignment to be granted by Andrade Gutierrez Concessões S.A. ("AGC") and AGC Participações Ltda. ("AGCP" and, together with AGC, the "Conditional Collateral Providers" and, together with AGIE, the "Collateral Providers") over outstanding common shares (and their corresponding economic rights) of CCR S.A., a corporation (sociedade anônima) incorporated under the laws of the Federative Republic of Brazil ("CCR"), that are owned by the Conditional Collateral Providers, currently representing 14.86% of the total outstanding common stock of CCR (the "CCR Shares") (the "Conditional Collateral" and, together with the AGE Collateral, the "Collateral"). As all CCR Shares are subject to certain existing liens, the effectiveness of the Conditional Collateral will be conditioned on the release of the CCR Shares from certain existing liens thereon, all pursuant to a certain conditional Shares Fiduciary Assignment Agreement and Other Covenants (Contrato de Alienação Fiduciária de Ações e Outras Avenças) to be entered into by and between the Issuer, the Conditional Collateral Providers and the collateral agent on behalf of the holders of the New Notes (the "Conditional Collateral Agreement"). Please refer to the Offering Memorandum and Consent Solicitation Statement, dated as of July 19, 2018, for further information on the creation and perfection of the Collateral.

As a result, once the security interest created under the AGE Collateral Agreement is fully perfected in accordance with Brazilian law, the New Notes will be senior to all of the Issuer's existing and future unsecured and unsubordinated indebtedness, including the Old Notes, to the extent of the value of the AGE Collateral securing the New Notes and senior to all of the Issuer's existing and future subordinated indebtedness and the Guarantors' obligations under the Guarantee will be senior to all of the Guarantors' existing and future unsecured and unsubordinated obligations, to the extent of the value of the AGE Collateral securing the Guarantee and senior to all of the Guarantors' existing and future subordinated obligations (subject, in the case of Zagope, to certain limits described in the Offering Memorandum).

Additionally, once certain conditions precedent described in the Conditional Collateral Agreement are satisfied and assuming that the security interest created under the Conditional Collateral Agreement is fully perfected in accordance with Brazilian law, the New Notes will be senior to all of the Issuer's existing and future unsecured and unsubordinated indebtedness, including the Old Notes, to the extent of the value of the Collateral securing the New Notes and senior to all of the Issuer's existing and future subordinated indebtedness. The Guarantors' obligations under the Guarantees will be senior to all of the Guarantors' existing and future unsecured and unsubordinated obligations, to the extent of the value of the Collateral securing the Guarantee and senior to all of the Guarantors' existing and future subordinated obligations (subject, in the case of Zagope, to certain limits described in the Offering Memorandum).

In connection with the Exchange Offer, the Issuer is also soliciting consents from holders of the Old Notes for the Proposed Amendments, which will result in the elimination of certain covenants and events of default provisions under the Old Notes indenture. In order for the Proposed Amendments to be adopted, holders of not less than a majority of the aggregate principal amount of the outstanding Old Notes must consent to them. By tendering Old Notes for exchange, holders will be deemed to have validly delivered their consents to the Proposed Amendments. If the Proposed Amendments are adopted, the Old Notes will be governed by the applicable amended indenture, which will have different terms and afford significantly reduced protection to the holders of those securities compared to those currently applicable to the Old Notes or those that will be applicable to the New Notes. In addition, Old Notes will not get the benefit of the Collateral securing the New Notes and Eligible Holders of the Old Notes who do not participate in the Exchange Offer and Consent Solicitation will be effectively subordinated to the New Notes, to the extent of the value of the Collateral securing the New Notes.

THE OFFERING MEMORANDUM AND CONSENT SOLICITATION STATEMENT CONTAINS CERTAIN IMPORTANT INFORMATION THAT SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT TO THE EXCHANGE OFFER AND CONSENT SOLICITATION, IN PARTICULAR, SEE "RISK FACTORS" IN THE OFFERING MEMORANDUM AND CONSENT SOLICITATION STATEMENT. THIS ANNOUNCEMENT MUST BE READ IN CONJUNCTION WITH THE OFFERING MEMORANDUM AND CONSENT SOLICITATION STATEMENT.

Subject to the terms and conditions set forth in the Offering Memorandum and Consent Solicitation Statement, the Exchange Offer and Consent Solicitation will expire at 11:59 p.m., New York City time, on August 15, 2018, unless extended or earlier terminated by us (such time and date, as the same may be extended or earlier terminated, the "Expiration Time"). Eligible Holders who validly tender (and do not validly withdraw) their Old Notes at or prior to 11:59 p.m., New York City time, on August 1, 2018, unless extended or earlier terminated by us (such date and time, including as extended or earlier terminated, the "Early Participation Time") (the "Early Participants"), will be eligible to receive the Total Exchange Consideration (as defined below), which includes the Early Participation Premium (as defined below), not including accrued and unpaid interest. Eligible Holders who validly tender the Old Notes after the Early Participation Time but at or prior to the Expiration Time in the manner described herein will not be eligible to receive the Early Participation Premium and will therefore only be eligible to receive the  Exchange Consideration (as defined below), not including accrued and unpaid interest. Any Old Notes that have been validly tendered and consents validly delivered pursuant to the Exchange Offer and Consent Solicitation may be validly withdrawn and revoked prior to the Early Participation Time but not thereafter, except as may be required by applicable law or unless if otherwise extended by the Issuer.

The "Total Exchange Consideration" for each US$1,000 principal amount of Old Notes validly tendered (and not validly withdrawn) at or prior to the Early Participation Time and accepted for exchange pursuant to the Exchange Offer and Consent Solicitation will consist of either, at the election of Early Participants, (i) US$1,000 in New Notes, or (ii) a combination of their pro-rata share of a cash consideration totaling US$37 million (the "Cash Pool"), which will only be available to Early Participants (the "Cash Consideration"), and New Notes, in each case limited to US$1,000 in the aggregate, plus an early participation premium equal to US$15 in New Notes (the "Early Participation Premium"). The Cash Consideration payable to each Early Participant electing to receive it will be calculated based on the pro-rata share of the principal amount of Old Notes tendered by each Early Participant electing to receive the Cash Consideration, over the total principal amount of Old Notes tendered by all Early Participants electing to receive the Cash Consideration. Any Eligible Holders who validly tender Old Notes after the Early Participation Time but at or prior to the Expiration Time will only receive, for each US$1,000 principal amount of the Old Notes accepted for exchange, US$1,000 in New Notes (the "Exchange Consideration"). Eligible Holders who are not Early Participants will not have the opportunity to elect to receive the Cash Consideration.

The Exchange Offer and Consent Solicitation and the New Notes have not been registered under the Securities Act of 1933, as amended (the "Securities Act") or any state securities laws. Accordingly, the New Notes will be subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under the Securities Act and other applicable securities laws, pursuant to registration or exemption therefrom. The Exchange Offer and Consent Solicitation will only be made, and the New Notes are only being offered and will only be issued (1) in the United States, to holders of Old Notes that are "qualified institutional buyers" as defined in Rule 144A under the Securities Act, in a private transaction in reliance upon the exemption from the registration requirements of the Securities Act provided by Section 4(a)(2) thereof and (2) outside the United States, to holders of Old Notes that are persons other than "U.S. persons" as defined in Rule 902 under the Securities Act in offshore transactions in compliance with Regulation S under the Securities Act ("Regulation S"), and/or (b) to "qualified investors", as defined in the EU Directive 2003/71/EC, as amended, and in the Luxembourg law of 10 July 2005 on prospectuses for securities, as amended (the "Eligible Holders").

Subject to the terms of the Exchange Offer and Consent Solicitation set forth in the Offering Memorandum and Consent Solicitation Statement, delivery of the New Notes is currently expected to be made in book-entry form through the facilities of The Depositary Trust Company and its direct and indirect participants on the settlement date, which is currently expected to be on or about August 20, 2018 ("Settlement Date"). There is no "early settlement date" with respect to the Old Notes regardless of whether such Old Notes were tendered at or prior to the Early Participation Time.

The New Notes will only be issued in minimum denominations of US$100,000 and integral multiples of US$1,000 in excess thereof.  No tender of Old Notes will be accepted if such tender results in the issuance of less than US$100,000 principal amount of New Notes.  If, pursuant to the Exchange Offer and Consent Solicitation, a tendering Eligible Holder would otherwise be entitled to receive a principal amount of New Notes that is not equal to US$100,000 or an integral multiple of US$1,000 in excess thereof, such principal amount will be (i) if the excess amount is equal to or less than US$499, rounded down to the nearest US$100,000 or integral multiple of US$1,000 in excess thereof, or (ii) if the excess amount is equal to or greater than US$500, rounded up to the nearest US$100,000 or integral multiple of US$1,000 in excess thereof. The rounded amount will be the principal amount of New Notes such Eligible Holder will receive and any fractional portions of New Notes not received by Eligible Holders as a result of rounding down will be paid in cash on the Settlement Date. Interest on the New Notes will begin to accrue on their issue date, which the Issuer expects to be the same as the Settlement Date.

Documents relating to the Exchange Offer and Consent Solicitation will only be distributed to Eligible Holders of Old Notes. Eligible Holders can only access the Offering Memorandum and Consent Solicitation and related documents if they electronically complete an eligibility certification (the "Eligibility Letter") set out on the website of the Information and Exchange Agent (as defined below) at www.dfking.com/ag. Upon receipt of a duly completed eligibility certification, the Information and Exchange Agent will email login details to that Eligible Holder so that they can access a copy of the Offering Memorandum and Consent Solicitation Statement and related documents on that website.

The Issuer's obligation to exchange the Old Notes in the Exchange Offer and Consent Solicitation is conditioned on the satisfaction or waiver of certain conditions described in the Offering Memorandum and Consent Solicitation Statement. The consummation of the Exchange Offer and Consent Solicitation is conditioned upon, among other things, the valid tender, without subsequent withdrawal, of at least 95% in aggregate principal amount of outstanding Old Notes. The Issuer has the right, in its sole discretion, but subject to applicable law, to amend or terminate the Exchange Offer and Consent Solicitation at any time. In the event of a termination of the Exchange Offer and Consent Solicitation, no Exchange Consideration will be paid, and the Old Notes tendered will be promptly returned to the tendering Eligible Holders.

The Information and Exchange Agent for the Exchange Offer and Consent Solicitation is D.F. King & Co., Inc. (the "Information and Exchange Agent"). To contact the Information and Exchange Agent, banks and brokers may call +1-212-269-5550, and others may call U.S. toll-free: +1-866-342-4881. Additional contact information is set forth below.

By Mail, Hand or Overnight Courier:

48 Wall Street

22nd Floor

New York, NY 10005

USA

Attention: Andrew Beck

By Facsimile Transmission:

(for eligible institutions only)

+1 212-709-3328

Attention: Andrew Beck

Confirmation by Telephone:

+1 212-269-5552

Email:

ag@dfking.com  

You can review the eligibility form at www.dfking.com/ag

Banco Bradesco BBI S.A. and Houlihan Lokey, Inc. are acting as financial advisors to the Issuer.

* * *

This notice to the market does not represent an offer to sell securities or a solicitation to buy securities in the United States or in any other country. This notice to the market is released for disclosure purposes only, in accordance with applicable legislation. It not does not constitute marketing material, and should not be interpreted as advertising an offer to sell or soliciting any offer to buy securities issued by the Issuer. This notice to the market is not for distribution in or into or to any person located or resident in any jurisdiction where it is unlawful to release, publish or distribute this announcement.

None of the Information and Exchange Agent, the Issuer, the Guarantors or their respective affiliates makes any recommendation in connection with the Exchange Offer and Consent Solicitation as to whether or not any Eligible Holder of Old Notes should tender or refrain from tendering their existing notes, and no person has been authorized by any of them to make such a recommendation. accordingly, you must make your own determination as to whether to tender your Old Notes and, if so, the aggregate principal amount of Old Notes to tender. you should read the Offering Memorandum and Consent Solicitation Statement and consult with your financial, legal and tax advisors to make that decision.

Forward-Looking Statements

This notice includes and references "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may relate to, among other things, the Issuer's business strategy, goals and expectations concerning its market position, future operations, margins and profitability.

Although the Issuer believes the assumptions upon which these forward-looking statements are based are reasonable, any of these assumptions could prove to be inaccurate and the forward-looking statements based on these assumptions could be incorrect.

The matters discussed in these forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results and trends to differ materially from those made, projected, or implied in or by the forward-looking statements depending on a variety of uncertainties or other factors.

The Issuer undertakes no obligation to update any of its forward-looking statements.

Cision View original content:http://www.prnewswire.com/news-releases/ag-international-announces-commencement-of-a-private-offer-to-exchange-any-and-all-outstanding-4-000-senior-notes-due-2018-for-cash-and-newly-issued-11-000-senior-secured-notes-due-2021-or-for-all-new-newly-issued-11-000-senior-300684155.html

SOURCE Andrade Gutierrez International S.A.

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