why it seeks to nationalize a large part of its capital

The metallurgical company founded by the Pescarmona family will issue new shares for US $ 20 million that it will offer to the national government and Mendoza

After having completed the process of restructuring a millionaire debt and having received help from the Government to face this process, IMPSA Now he is going to seek funds in the capital market.

It will do so from the issuance of a new series of actions with which you hope to get close to u $ s20 million, a figure that according to its authorities is necessary for the recomposition of the working capital.

This would be the third step of the call Capital Structure Recomposition Plan launched last year by the company. The first, debt restructuring, was successfully completed last November, while in December the Ministry of Productive Development approved IMPSA’s entry into the PAEERP program to assist strategic companies that export high technology.

The data is contained in a document sent by the former company of the Pescarmona family to the National Securities Commission (CNV), in which it is also clarified that if the share trusts that hold IMPSA shares renounce their right preferential subscription on the same or decide not to exercise it, will be offered to the national government and that of Mendoza.

That is, they could add the National state or the provincial one as new shareholders in conjunction with an important group of creditors who control the company based in Mendoza.

Currently, and since April 2018, IMPSA shares are held by two trusts, one of which (where they are 65% of the total) was constituted for the benefit of creditors included in the 2017 APE; and the other (with the remaining 35%) was constituted in favor of the shareholders that controlled IMPSA before the restructuring.

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The purpose of both trusts was to guarantee the orderly sale of the company’s shares, through a process in the framework of which a restructuring would be carried out.

A key assembly for restructuring

To continue with this process and obtain the necessary authorizations to achieve the issuance of the new class of shares, IMPSA’s board of directors has called an ordinary and extraordinary shareholders’ meeting for the March 16.

On that day, a comprehensive reform of the bylaws will also be discussed in order, among other issues, to reflect the creation of Class C shares; contemplate the new shareholding structure; increase to seven the number of regular directors and provide that Class C will be responsible for the election of four regular directors and up to four other alternates, including the president and vice president of the company. At the same time, Class A and B shareholders will maintain their right to appoint two directors and one director, with their respective alternates.

This process is in addition to the plan to rebuild your capital structure that it had proposed within the framework of the Extrajudicial Preventive Agreement (APE) that the metallurgical company presented last year before the Second Court of Insolvency Proceedings, District I of Mendoza, which has been carrying out its bankruptcy process since 2018.

In this offer, IMPSA is committed to restructuring u $ s536 million between capital and interests of the so-called “eligible debt” (which could be verified) that does not include the company’s outstanding obligations with state entities, such as Anses or AFIP, which is known as “excluded debt.”

IMPSA already received government assistance at the end of last year.

IMPSA already received government assistance at the end of last year.

The proposal mixes a series of financial instruments to cancel your accounts such as Negotiable Obligations (ON), with a public offering denominated in dollars; new international bond also in dollars and new millionaire loans.

He proposed to issue a bond in dollars, with an annual interest of 1.5%, whose capital would begin to be paid in 2028 in nine annual installments that will run until 2036. Previously, the offer contemplates that between 2025 and 2028 they would begin to Part of the interest be paid semi-annually.

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In addition, IMPSA undertook to enter the public offering and listing of shares from this issuance of Class C shares.

Additionally, you will hire a international financial advisor to carry out a capital valuation, establishing that no shares may be issued under par.

Currently, the company employs more than 720 own workers and another 100 SMEs with which it usually works and had the need to rebuild its capital structure, affected by the unfavorable context that arose after having successfully completed the closing of the judicial preventive agreement in the 2017.

History of a debt

The problems related to its indebtedness began when, during 2014, its Brazilian subsidiary Wind Power Energy, entered into cessation of payments, ceasing to operate and is still in bankruptcy in Brazil.

Because a large part of the company’s debt was guaranteed by IMPSA, the creditors filed claims against the Mendoza company for more than US $ 850 million, which led the group’s total indebtedness to exceed u $ s1,100 million.

The company was forced to initiate a negotiation process with its creditors that resulted in a restructuring agreement implemented through the APE of 2017 that allowed it to reduce the liability to $ 520 million, which in any case represented slightly more than double the debt. own that IMPSA originally had.

As part of this process, the shareholding composition of the company, its board of directors and its management were modified, forcing the exit of Enrique Pescarmona as its CEO and all his family of control of the company.

During those years, it managed to obtain new contracts and strengthen its public image, but it was again affected by the worsening of the macroeconomic situation as of May 2018, which resulted in the signing of a stand-by credit agreement between Argentina and the The IMF imposed severe restrictions on public spending and led to the postponement and cancellation of various public works projects that IMPSA had reasonable expectations of obtaining.

Therefore, the issuance of the new Class C shares will allow you to sustain this commercial process to consolidate your local operations and return to compete in the markets that it led for decades, exporting 85% of its products to Asia, Europe, Africa and the Americas.

This new capitalization will allow to preserve years of investment in technology for the national industry and to remain as international benchmarks in energy matters. for the export of high added value products “, said Juan Carlos Fernández, CEO of IMPSA.

Currently, the company is executing contracts for hydroelectric, nuclear, wind and solar plants, as well as equipment for the oil and gas industry. For example, it designs and manufactures the new turbines for the Yacyretá Hydroelectric Plant, the wind turbines for Parque Arauco (La Rioja), equipment for the El Tambolar Hydroelectric Plant (San Juan), equipment for YPF and the manufacture of the first Argentine nuclear reactor for power generation, CAREM, among the main projects.

In turn, it plans to compete this year to carry out projects in Latin America, the United States, India and Southeast Asia.

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