Santiago bus company restructures debt and sells terminals

07 August 2020

Cleary Gottlieb Steen & Hamilton LLP in New York and Mendoza Abogados in Bogotá have helped Chilean bus concessionaire Inversiones Alsacia, and its subsidiary Express de Santiago Uno, renegotiate the terms of an existing debt agreement, while the company also sold five bus terminals in Santiago.

The bondholders relied on Quinn Emanuel Urquhart & Sullivan LLP in New York and Claro & Cía in Santiago. It is understood that Dechert also advised the bondholders, but Latin Lawyer could not confirm this prior to publishing.

The restructuring amended the terms of the companies’ existing bonds worth US$364 million, which included new payment dates. As part of the agreement, the shareholders, including one Colombian investor, will receive a cash payment for a confidential amount. The restructuring closed on 26 June.

Originally due to mature in 2018, the bonds have already undergone several restructurings with a group of bondholders that hold more than 60% of that debt. In a 2014 Chapter 11 reorganisation, the company received an extension of up to three years, setting the new maturity date at 2021. The bus company struck a second restructuring deal with bondholders in 2017 to make further, but undisclosed, amendments to the repayment terms.

In connection with the restructuring, Inversiones Alsacia sold its contracts for five bus terminals to local insurance company Compañía Consorcio Nacional de Seguros for US$110 million. The bus terminals are across several Santiago municipalities, including Padahuel, Maipú and Renca. The facilities form part of the capital’s transport network Red Metropolitana de Movilidad, previously known as Transantiago.

The bus concessionaire will use the proceeds to pay severance packages to former employees that have been made redundant as well as to fund its payments to bondholders and creditors.

The latest development is the culmination of a six-year process, says Dennis Hranitzky, a partner at Quinn Emanuel who has advised on the various restructuring agreements over the years, including at his former firm Dechert, adding that Alsacia and Express Uno Santiago merged to avoid defaulting on debt back in 2014.

The restructuring was completed in spite of the covid-19 pandemic. But that was not the only setback the deal suffered. “Covid-19 significantly slowed the negotiation process down, but that was on the back on the civil unrest,” explains Hrantizky. Civil unrest erupted in Chile in October 2019 when protests over financial inequality broke out after an increase to subway fare prices. With Santiago’s transport network central to the protests, the deal came up against additional external pressures, says Hrantizky.

“There’s never going to be another deal like this,” he says.

Express de Santiago Uno was set up in 2004 with the purpose of bidding for the capital’s Transantiago infrastructure plan, now called Red Metropolitana de Movilidad. The business operates buses on the network’s Unidad 4, which serves the eastern and western municipalities of the city. Alsacia operates a fleet on the Unidad 1 circuit, covering the north-western parts of the city.

Counsel to Inversiones Alsacia and Express de Santiago Uno

Cleary Gottlieb Steen & Hamilton LLP

Partners Adam Brenneman and Rich Cooper, and associate Laura Daugherty in New York

Mendoza Abogados

Partner Mateo Mendoza and associates Pablo Rico and Mariana Gutierrez in Bogotá

Counsel to bondholders

Quinn Emanuel Urquhart & Sullivan LLP

Partner Dennis Hranitzky in New York

Claro & Cía

Partner Jorge Martín and associate Marcelo Estay in Santiago

Source: LatinLawyer

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