Attorneys Guide Mexican Refinancing Through Narrow Window in Markets
December 5, 2007, Daily Business Review

White & Case recently advised on the $520 million offering by Mexican paper company Corporacion Durango.

"After we concluded (Durango's) financial restructuring two years ago, the company had two types of debt outstanding: One set to banks and another set to bondholders," said Emilio Alvarez-Farre, a partner in the Securities and Capital Markets Practice at the Firm's Miami office.  This deal provided a way to help Durango come back from insolvency.

"The issuance of bonds provided the proceeds for paying off the company's outstanding debt and the retiring of the bond debt was accomplished by means of a tender offer," Alvarez-Farre said.

The deal was originally to close in the summer, but was put off by investor concerns.

"The sub-prime mortgage crisis effectively shut down credit markets," said Mark Bagnall, a partner in the Securities and Capital Markets Practice at White & Case in Miami, who along with Alvarez-Farre, advised on the deal.  "[This] frustrated plans to begin the "road show" for the bond issue.  One of our challenges was keeping investors who were tendering the old notes interested in staying in the deal over many months … and keeping the disclosure regarding Durango current so that as soon as the (credit) markets were open again we could go out to the market."

The hard work meant when the Federal Reserve made rate cuts September, White & Case was ready.

"We were in the market within a week after that," Bagnall said. "Being able to do that was probably a key to the success of the deal."

"It was fortuitous, because a couple of weeks after that, the markets closed up again," Alvarez-Farre said.  "Lack of certainty continues to affect the market and very few [bond offerings] have gone out since we closed the deal."

"There are a lot of deals in the pipeline at various investment banks that are continuing to stay on the sidelines, waiting until perhaps January or February," Bagnall added.