Bondholders of Empresas La Polar SA agreed to accept two-thirds of the company’s shares as part of a debt-restructuring plan designed to help the Chilean department store operator stave off bankruptcy.
Holders of La Polar’s 197 billion pesos ($334 million) of Series F bonds and $449 million Series G bonds approved the plan today at a meeting in Santiago. Under the terms, they will hand in their notes in exchange for new bonds due in 2113 that are convertible into shares. Holders of the F bonds will receive about 1 billion pesos a month in coupon payments until the transaction is approved by regulators, La Polar chairman Cesar Barros told journalists after the meeting.
“How long it takes will depend on how fast the regulator moves,” Barros said. “If they hurry, we could have this done by November.”
Shares of La Polar, which sells clothing and electronics through 40 stores in Chile, tumbled 31 percent this year as the Santiago-based company disclosed the effort to restructure its obligations. La Polar has struggled to regain investor confidence since defaulting in 2011, when it acknowledged lying on financial statements and modifying loan terms without informing customers.
The shares were unchanged as of 2:03 p.m. today in Santiago.
Barros said earlier this month that the company needed to reach an agreement with creditors in August to assure its survival after suppliers froze lines of credit and refused to sell them products for the Christmas season.
Today’s agreement will unfreeze the lines of credit and ensure that the company has sufficient inventory for December, Barros said.