Metrogas launches debt restructuring offer

Argentine natural gas distributor Metrogas (NYSE: MGS) has launched a debt restructuring offer in the form of an out-of-court settlement known as an "acuerdo preventivo extrajudicial" (APE), the company said in statement to the Buenos Aires stock exchange Friday. The two options on offer to creditors are Metrogas buying back its debt at 50% of face value up to US$100mn, and a modification option in which the principal is increased by adding capitalized interest, which is paid in instalments for nine years. Under this option, the modified debt will pay 3% interest for the first two years, 4% for the next two years, 5% for the following two years and then 6% for the remaining period. The offer applies to holders of the company's series A debentures at an interest rate of 9.875% due 2003, series B negotiable debentures at an interest rate of 7.35% due 2002, series C negotiable debentures at a variable interest rate due 2004 and existing company debt holders, the statement said. If two thirds of shareholders approve the APE, the company can submit its offer for court approval. The offer expires at 5:00pm EST on December 10 unless the company decides to extend it. Metrogas suspended payments on all its debt in March 2002 after defaulting on a US$1.8mn coupon payment on US$130mn of floating rate notes the month before, due largely to the devaluation of the peso and the government's decision to cap utility rates.