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Chile’s Calichera Seeks Covenant Changes on Dollar Debt

Soc. de Inversiones Pampa Calichera SA, one of the holding companies through which Julio Ponce controls Soc. Quimica & Minera de Chile SA, asked holders of its 7.75% bonds in dollars to remove covenants that limit extra debt.

Pampa Calichera also wants to change restrictions on payments and asset sales, according to a statement published on the website of the Chilean securities regulator. Pampa Calichera offered to pay investors $10 for every $1,000 of the bonds they hold if they agree to the new terms before Aug. 15.

SQM, controlled by billionaire Ponce, produces iodine, lithium and potash from salt flats in Chile’s Atacama desert. The company reported first-quarter profit rose 35 percent as the price of iodine, used in x-ray equipment, climbed 10 percent.

The section the company wants to change includes a provision requiring it to have earnings before items of more than twice its financing costs at the end of the fourth quarter. Under the proposal, Pampa Calichera would be obliged to hold $100 million of SQM stock to serve as collateral.

The $250 million bonds are due in February 2022. The bonds were sold under U.S. Securities Act Rule 144A, which means that, in the U.S., only investors who are considered qualified can buy them.

To contact the reporter on this story: Sebastian Boyd in Santiago at sboyd9@bloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net

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