FEMSA ANNOUNCES COMMENCEMENT OF TENDER OFFER
Fomento Económico Mexicano, known as FEMSA (NYSE: FMX), announced the start of a tender offer aiming to purchase up to $250 million in aggregate principal amount of certain notes. This offer, under specific conditions, targets notes with a 3.500% interest rate due in 2050. The offer includes an early tender premium of $30 per $1,000 of principal for notes tendered by June 17, 2024. The offer will expire on July 3, 2024, unless extended or terminated sooner. BofA Securities, Inc. is acting as the dealer manager, with Global Bondholder Services as the tender and information agent. FEMSA’s initiative is part of a broader strategic review announced in February 2023.
Commencement of tender offer to purchase up to $250 million in principal amount of notes.
Early tender premium of $30 per $1,000 principal amount for early submissions.
Participation of reputable financial agent BofA Securities, Inc.
Part of a broader strategic review aimed at optimizing FEMSA's capital structure.
Risk of oversubscription if more notes are tendered than the $250 million cap.
Potential financial impact from the need to purchase a significant amount of outstanding notes.
FEMSA reserved the right to amend or terminate the offer, adding uncertainty for investors.
Requirement for proration of tendered notes if the offer is oversubscribed, potentially limiting purchases.
Insights
The tender offer by FEMSA to repurchase up to
From a market perspective, this tender offer aligns with FEMSA's broader strategic initiatives announced earlier, which included a comprehensive review of its business and capital structure. The action signals the company's commitment to maintaining a robust financial health, potentially enhancing investor confidence. The proration mechanism mentioned, where notes will be accepted on a prorated basis if oversubscribed, also ensures a fair process for all participating noteholders, though it introduces some uncertainty regarding the final amount accepted for those tendering post the early tender deadline. This maintains equity amongst holders but may discourage some from participating late. Investors should keep an eye on FEMSA's future announcements and financial reports for indications of how this tender offer impacts its overall capital allocation strategy.
The legal dimensions of this tender offer are complex but standardized within market practices. FEMSA has applied diligent measures such as engaging BofA Securities as the Dealer Manager and Global Bondholder Services Corporation as the Tender and Information Agent, ensuring regulatory compliance and smooth execution. The tender offer documentation explicitly states the conditions under which the offer can be extended, amended, or terminated, providing transparency and mitigating legal risks. Investors should carefully consider the offer's terms within the provided Offer to Purchase document, as it contains critical information about the proration process, deadlines and the calculation of the total consideration. FEMSA's adherence to these practices underscores its commitment to regulatory adherence and fair dealing with its noteholders.
The Tender Offer is being made pursuant to the terms and subject to the conditions set forth in the Offer to Purchase dated June 4, 2024 (as may be amended or supplemented from time to time, the "Offer to Purchase").
The following table sets forth the Notes subject to the Tender Offer:
Notes | CUSIP/ISIN | Principal | Reference | Bloomberg Reference Page | Fixed Spread (basis points)(1) | Hypothetical Total |
| 344419 AC0 / | US$1,556,946,000 | Treasury Note due 5/15/2054 | PX1 | +50 |
____________________________________________________________________________________________________________________ | |
(1) | The Total Consideration (as defined below) payable per each |
(2) | Per |
(3) | The maturity date for the Notes is January 16, 2050. |
The Tender Offer will expire at 5:00 p.m.,
Tenders of Notes may be withdrawn at any time on or before 5:00 p.m.,
On the Price Determination Date, FEMSA will notify the tender agent of the Reference Yield, Total Consideration and Offer Consideration, and will make a public announcement thereof to the Holders promptly after 11:00 a.m.,
The total consideration (the "Total Consideration") offered for each
(1) the present value on the Initial Settlement Date (as defined below) of (x)
(2) Accrued Interest (as defined below) to, but not including, the Initial Settlement Date,
such price being rounded to the nearest
The Total Consideration, when calculated in the manner set out in the Offer to Purchase, includes the Early Tender Premium.
Subject to the terms and conditions of the Offers, each Holder who validly tenders on or prior to the Early Tender Time and does not validly withdraw such Holder's Notes will be entitled to receive, if such Notes are accepted for purchase pursuant to the Tender Offer (the date of such purchase, the "Initial Settlement Date"), the Total Consideration, plus accrued and unpaid interest on the purchased Notes (the "Accrued Interest") from and including the last interest payment date to, but not including, the Initial Settlement Date and additional amounts in respect of withholding taxes applicable to the Accrued Interest (including gains derived from the sale of the Notes in the Offers that are treated as interest), if any (the "Additional Amounts"). Holders who validly tender their Notes after the Early Tender Time but on or prior to the Expiration Time will be entitled to receive, if such Notes are accepted for purchase pursuant to the Tender Offer (the date of such purchase, the "Final Settlement Date" and each of the Initial Settlement Date and the Final Settlement Date, a "Settlement Date"), the Total Consideration minus the Early Tender Premium, plus Accrued Interest to, but not including, the Final Settlement Date and Additional Amounts, if any.
Assuming all conditions to the Tender Offer have been satisfied or waived, the Initial Settlement Date is expected to occur on the second business day following the Early Tender Time, or June 20, 2024, and the Final Settlement Date is expected to occur on the second business day following the Expiration Time, or July 8, 2024.
The Tender Offer is not contingent upon the valid tender of any minimum principal amount of Notes. FEMSA's obligation to accept for purchase Notes validly tendered pursuant to the Tender Offer is subject to the satisfaction or waiver of each and all conditions set forth in the Offer to Purchase. Subject to applicable law, FEMSA reserves the right, at any time and from time to time, in its sole discretion, to (x) waive any and all conditions to the Tender Offer on or prior to the Initial Settlement Date, without necessarily extending withdrawal rights except as may be required by applicable law, or the Expiration Time, (y) extend the Tender Offer or (z) amend in any respect (including to increase the Tender Cap), withdraw or terminate the Tender Offer, including if the conditions of the Tender Offer are not satisfied or waived.
If the acceptance and purchase of all Notes validly tendered (and not validly withdrawn) on or prior to the Early Tender Time would cause FEMSA to purchase an aggregate principal amount of Notes in excess of the Tender Cap, then the Tender Offer will be oversubscribed at the Early Tender Time. Accordingly, FEMSA will not accept for purchase any Notes tendered after the Early Tender Time and FEMSA will (assuming satisfaction or, where applicable, waiver of the conditions to the Tender Offer) only accept for purchase Notes tendered on or prior to the Early Tender Time on a prorated basis such that FEMSA purchases an aggregate principal amount of Notes not in excess of the Tender Cap.
If the Tender Offer is not oversubscribed at the Early Tender Time and the acceptance and purchase of all Notes validly tendered prior to the Expiration Time would cause FEMSA to purchase an aggregate principal amount of Notes (taking into account the aggregate principal amount of Notes tendered on or prior to the Early Tender Time and accepted for purchase pursuant to the Tender Offer) in excess of the Tender Cap, then the Tender Offer will be oversubscribed at the Expiration Time and FEMSA will (assuming satisfaction or, where applicable, the waiver of the conditions to the Tender Offer) have accepted for purchase pursuant to the Tender Offer all Notes validly tendered on or prior to the Early Tender Time and will only accept for purchase Notes tendered after the Early Tender Time and prior to the Expiration Time on a prorated basis such that FEMSA purchases an aggregate principal amount of Notes (taking into account the aggregate principal amount of Notes tendered on or prior to the Early Tender Time and accepted for purchase pursuant to the Tender Offer) not in excess of the Tender Cap.
If proration of tendered Notes is required, FEMSA will determine the final proration factor as soon as practicable after the Early Tender Time or Expiration Time, as applicable, and will inform the Holders of Notes of the results of the proration. In the event proration is required, FEMSA will multiply the principal amount of each valid tender of Notes by the applicable proration rate and round the resulting amount down to the nearest
The times and dates described herein and in the Offer to Purchase are subject to FEMSA's right to extend, amend and/or terminate the Tender Offer (subject to applicable law and as provided in the Offer to Purchase). Holders of Notes are advised to check with any bank, securities broker or other intermediary through which they hold Notes as to when such intermediary would need to receive instructions from a beneficial owner in order for that beneficial owner to be able to participate in, or withdraw their instruction to participate in, the Tender Offer before the deadlines specified herein and in the Offer to Purchase. The deadlines set by any such intermediary and DTC for the submission and withdrawal of tender instructions will also be earlier than the relevant deadlines specified herein and in the Offer Documents.
FEMSA has engaged BofA Securities, Inc. to act as dealer manager in connection with the Tender Offer (the "Dealer Manager"). Global Bondholder Services Corporation is acting as the tender agent and information agent for the Tender Offer (the "Tender and Information Agent").
Any questions or requests for assistance regarding the Tender Offer may be directed to BofA Securities, Inc. at (888) 292-0070 (toll-free) or (646) 855-8988 (collect). Requests for additional copies of the Offer Documents may be directed to Global Bondholder Services Corporation at +1 (855) 654-2014 (toll-free) or +1 (212) 430-3774 (collect).
This press release must be read in conjunction with the Offer to Purchase. This press release and the Offer to Purchase contain important information which should be read before any decision is made with respect to the Tender Offer. The Tender Offer is made solely pursuant to the Offer to Purchase. None of FEMSA, the Dealer Manager or the Tender Agent and Information Agent or any of their respective affiliates, directors, officers, agents, attorneys or employees makes any recommendation as to whether Holders should tender, or refrain from tendering Notes pursuant to the Tender Offer and none of them has been authorized or has authorized any person to make any such recommendation. Each Holder is solely responsible for making its own independent appraisal of all matters as such Holder deems appropriate (including those relating to the Tender Offer and FEMSA) and each Holder must make its own decision as to whether to tender Notes pursuant to the Tender Offer and, if so, the principal amount of the Notes as to which action is to be taken.
This press release is for informational purposes only. This press release shall not constitute an offer to purchase or sell or the solicitation of an offer to purchase or sell any securities, nor shall there be any such offer or solicitation in any state or jurisdiction in which such an offer or solicitation would be unlawful. The Tender Offer is not being made to Holders in any jurisdiction in which FEMSA is aware that the making of the Tender Offer would not be in compliance with the laws of such jurisdiction. The distribution of the Offer to Purchase or this press release in certain jurisdictions may be unlawful or otherwise restricted by law. Persons into whose possession the Offer to Purchase comes are required by FEMSA and the Dealer Manager to inform themselves about, and to observe, any such restrictions.
Neither the Offer to Purchase nor any documents related to the Tender Offer have been filed with, nor have they been approved or reviewed by, any federal or state securities commission or regulatory authority of any country. No authority has passed upon the accuracy or adequacy of the Offer to Purchase or any documents related to the Tender Offer, and it is unlawful and may be a criminal offense to make any representation to the contrary.
FEMSA Forward Announcement
The Tender Offer described above forms an integral part of the series of strategic initiatives announced by FEMSA in February 2023, as a result of a thorough strategic review of FEMSA's business platform. This review included the bottom-up definition of long-range plans for each business unit and the top-down analysis of FEMSA's corporate and capital structure. That announcement is available at: https://www.globenewswire.com/news-release/2023/02/15/2609255/0/en/FEMSA-Forward-Announcing-results-of-strategic-review.html. That announcement does not form part of this communication.
About FEMSA
FEMSA is a company that creates economic and social value through companies and institutions and strives to be the best employer and neighbor to the communities in which it operates. It participates in the retail industry through a Proximity Americas Division operating OXXO, a small-format store chain, and other related retail formats, and Proximity Europe which includes Valora, its European retail unit which operates convenience and foodvenience formats. In the retail industry, it also participates through a Health Division, which includes drugstores and related activities and Digital@FEMSA, which includes Spin by OXXO and Spin Premia, among other digital financial services initiatives. In the beverage industry, it participates through Coca-Cola FEMSA, the largest franchise bottler of Coca-Cola products in the world by volume. FEMSA also participates in the logistics and distribution industry through its Strategic Business Unit, which additionally provides point-of-sale refrigeration and plastic solutions to its business units and third-party clients. Across its business units, FEMSA has more than 392,000 employees in 18 countries. FEMSA is a member of the Dow Jones Sustainability MILA Pacific Alliance, the FTSE4Good Emerging Index and the Mexican Stock Exchange Sustainability Index: S&P/BMV Total México ESG, among other indexes that evaluate its sustainability performance.
Forward-Looking Statements
This press release contains forward-looking statements. Forward-looking statements are information of a non-historical nature or which relate to future events and are subject to risks and uncertainties. No assurance can be given that the transactions described herein will be consummated or as to the ultimate terms of any such transactions. FEMSA undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or future events or for any other reason.
View original content:https://www.prnewswire.com/news-releases/femsa-announces-commencement-of-tender-offer-302163929.html
SOURCE FOMENTO ECONÓMICO MEXICANO, S.A.B. DE C.V.
FAQ
What is the tender offer announced by FEMSA on June 4, 2024?
What is the early tender premium for the FEMSA tender offer?
When does the FEMSA tender offer expire?
What is the maturity date of the notes involved in FEMSA’s tender offer?
Who is managing the FEMSA tender offer?
