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Cap Cana could submit new restructuring offer to bondholders

Sao Paulo.- Cap Cana, the Dominican Republic real estate project and resort company, could finally settle with its bondholders after defaulting for the second time three years ago on at least USD 250m in debt, according to two sources claiming knowledge of the situation.

Holders of the Cap Cana USD 130m 10% senior secured notes due 2016 and its USD 126.5m 10% senior secured recovery notes due 2016 are expecting a new restructuring offer to be presented, the sources said. Cap Cana has been in talks with a group of bondholders and a proposal might be submitted in November, a first source said.

The company did not reply to messages seeking comment for this report. It remains unclear if Cap Cana has mandated advisors to submit the offer.

Some investors have been trying to contact the company to learn more about the potential agreement, a second source said. Little has been done to restructure Cap Cana’s debt since 2011, when it defaulted for the second time, the sources said. Controlling shareholders, led by Ricardo Hazoury, have been “radio silent,” one of the sources said. There were rumors the bonds were being consolidated into the hands of just a few holders, in anticipation of negotiations with the company, a third source said.

Cap Cana first defaulted on its USD 250m secured bonds in 2009, when it said the economic downturn and the US real estate crisis affected its operations. At the time, the company conducted an exchange offer, offering bondholders collateralization of 135% – compared to the previous 125%. It also offered receivables as part of a security package, and stricter rules to terminate mortgages, according to information that circulated among investors at the time of the exchange.

Bondholders, however, should take a different approach to the second restructuring, the first source said. Investors should demand a cash payment instead of taking the bonds in another exchange, the same source added. Cap Cana is interested in paying investors to release some of the collateral and continue developing its real estate projects, a fourth source said, adding there is a group of investors organized.

The company’s real estate projects have been surrounded with controversy as they attracted many investors, including Donald Trump, who sued the company in 2012 for fraud and for USD 14m in unpaid license fees, according to court documents. Trump and Cap Cana settled in 2013, and terms remain private.

Investors have had difficulty in getting information from the company, the second source said. Its last financial report is from 31 October 2013, just before the company repaid USD 4.9m in local bonds, whose public offering and trading had been suspended in July 2013 by the Dominican financial market regulator. At that time, Cap Cana reported it had USD 614,279 in cash versus USD 2.4m in December 2012. Total liabilities, including commercial papers, bank debt, suppliers, intercompany loans and the defaulted secured bonds, amounted to USD 762.8m.

Total revenues as of the end of October 2013 stood at USD 26.6m down from USD 29.03m in December 2012. Costs, on the other hand, rose from USD 5.16m to USD 10.78m in the same period. Free cash flow was negative at USD 4.16m in October 2013, while in December 2012 Cap Cana had a positive figure of USD 2.9m.

REDD Latin America is a financial news service

Source: DT

Category: DR News |

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Last updated October 20, 2016 at 7:03 PM
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