Milbank Represents Merrill Lynch in US$520 Million High Yield Offering by Corporación Durango, S.A.B. de C.V.
Largest Latin American High Yield Offering Since Credit Crisis
NEW YORK, November 7, 2007 – Reflecting continued confidence in the resurgent high yield market in Mexico, Corporación Durango, S.A.B. de C.V. (“Durango”) made one of the largest high yield offerings of the year by a Mexican company. Durango, a major Latin American paper producer, issued US$520 million of high yield bonds in an international offering under Rule 144A/Regulation S. Concurrent with the offering, Durango also successfully completed a tender offer for its outstanding US$433.8 million Series B step up rate senior secured guaranteed notes due 2012. The international law firm Milbank, Tweed, Hadley & McCloy LLP, led by partners Michael Fitzgerald and Joy Gallup, acted as US counsel to Merrill Lynch, the sole bookrunning manager of the offering and the dealer manager in the tender offer, in negotiating, structuring and closing the transaction.
Mr. Fitzgerald stated that “This is a notable deal in that it is the largest Latin American high yield offering since the credit crisis and it is a vote of confidence for Durango, which restructured substantially all its debt just five years ago. This shows that there are high yield refinancing opportunities in Latin America regardless of the slowdown in the high yield market for U.S. issuers.”
In addition to partners Michael Fitzgerald and Joy Gallup, the Milbank team included of counsel Frank Vivero, associates Pedro Reyes and Armando Valdes and former foreign associate Jorge Oria. Tax advice was provided by partner Bruce Kayle and associate Benjamin Suhr.
The 10.50% senior notes due 2017 in the offering were rated B+ by both Fitch and Standard & Poor’s. The proceeds from the offering were used principally to finance the tender offer and to repay other indebtedness.
Durango is one of the largest integrated paper producers based in Latin America in terms of sales, with operations in Mexico and the United States. Specializing in a variety of paper and packaging products, including containerboard, corrugated containers, multi-wall sacks, newsprint and uncoated free sheet, as well as plywood, Durango is Mexico’s only producer of unbleached virgin kraft pulp and one of Mexico’s largest users of recycled paper. Durango is widely considered one of the industry’s lowest cost producers. In 2006, Durango’s total sales volume was 1,507.8 thousand short tons of paper, packaging products and plywood.
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