Business Context and Reporting Period
Company: Embraer S.A.
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Date: August 30, 2013
Context: This filing clarifies that newly issued notes in an exchange offer are unsubordinated obligations. It announces an Exchange Offer and Consent Solicitation for outstanding 6.375% Notes due 2017 and 2020 issued by Embraer Overseas Limited and guaranteed by Embraer S.A.
Key Financial Metrics
The filing does not provide operational financial metrics such as revenue, profit, cash flow, margins, or liquidity ratios. The document focuses exclusively on debt restructuring terms.
| Debt Instrument | Principal Amount Outstanding | Original Maturity | Proposed New Maturity | Hypothetical Exchange Price (per $1,000) |
|---|---|---|---|---|
| 6.375% Notes due 2017 | $380.1 million | Jan. 24, 2017 | Sept. 16, 2023 | $1,075.04 (Early Participation: $1,125.04) |
| 6.375% Notes due 2020 | $500.0 million | Jan. 15, 2020 | Sept. 16, 2023 | $1,076.46 (Early Participation: $1,126.46) |
New Notes Terms: The new Senior Notes will bear interest at the bid-side yield on the 2.50% U.S. Treasury Note due August 15, 2023, plus 280 basis points. Interest is payable semi-annually starting March 16, 2014.
Material Changes
Debt Restructuring: Embraer is extending the maturity of approximately $880.1 million in existing debt from 2017 and 2020 to 2023.
Subordination Status: The filing explicitly clarifies that the New Notes are unsubordinated obligations, ranking pari passu with all existing and future debt of the Issuer.
Covenant Changes: The Consent Solicitation seeks to modify or eliminate certain restrictive covenants and events of default in the indentures governing the Old Notes.
Guidance, Outlook, and Risks
Offer Timeline: The Exchange Offer expires on September 25, 2013. An Early Participation Date is set for September 11, 2013, offering an additional $50 per $1,000 principal amount.
Conditions: The offer is subject to a minimum issuance of $300 million in New Notes and the absence of events that would prohibit or materially impair the transaction.
Risks: Management notes risks related to global economic conditions, capital markets, the cyclical nature of the aircraft production business, and global competition. The filing states that future expectations are subject to uncertainties and cannot be guaranteed.
Investor Verification Checklist
- Verify the final exchange price and interest rate, which depend on the U.S. Treasury yield at the "Pricing Time" (September 12, 2013).
- Confirm whether the minimum condition of $300 million in New Notes issued is met to ensure the transaction closes.
- Review the specific restrictive covenants and events of default being removed or modified via the Consent Solicitation.
- Check the status of the Registration Rights Agreement regarding the New Notes.
- Confirm eligibility requirements (Rule 144A QIBs or Regulation S non-U.S. persons) for participation.