Bondholders of Italian-based Teksid Aluminum are asking to be paid back at 111 cents on the dollar after the company offered to tender at 95. The 11 3/8% '11 bonds traded up five points to 101-102 after Teksid offered to tender the bonds in conjunction with the sale of certain assets to Tenedora Nemak. A trader said the company and bondholders will likely come to a compromise on the tender offer. He estimated the bonds will be paid back at 105.
The trader said the bondholders are pushing for a higher tender offer because the bonds' indentures contain no provision that permits the company to call the bonds. The 111 asking price is based on yield over Treasuries plus a certain number of basis points, he said. Teksid's bonds jumped 30 points to the low 90s a month ago after a rumor the company would be taken over (CIN, 10/13). On Nov. 3, it announced it would be selling certain assets to Nemak, a subsidiary of ALFA, a Mexican producer of petrochemicals, food products, auto supplies and telecommunications. Under the agreement, it is selling most of its North American operations as well as its operations in South America, China and Poland.
Teksid will receive $496.8 million in cash, along with an 11.5% equity interest in Nemak after the close of the deal, which is expected in the first quarter of 2007. In a release, the company said its offer to pay back bondholders at E950 per E1,000 of notes is at a large premium to their trading price before the deal's announcement. Teksid will use proceeds from the sale to pay down debt, including E115 million of senior secured credit facilities. A call to Massimiliano Chiara, finance director, was not returned.