17 August, 2021 Colombia

Plastics maker issues Peru’s first global sustainability-linked bond

Banking, Finance and Capital Markets

Peruvian plastic packaging company San Miguel Industrias (SMI) has hired Skadden, Arps, Slate, Meagher & Flom LLP in New York and BBGS Abogados (Peru) to issue sustainability-linked bonds and launch a tender offer, with both transactions worth a total of US$585 million.

For both deals, the banks enlisted Linklaters in New York, Alemán, Cordero, Galindo & Lee in Panama City, Consortium Legal in El Salvador and Guatemala, Peruvian firm Payet, Rey, Cauvi, Pérez Abogados, Pérez Bustamante & Ponce in Quito and Philippi Prietocarrizosa Ferrero DU & Uría (Colombia).

Latin Lawyer understands that Arias, Fábrega & Fábrega in Panama City also advised the issuer, but this could not be confirmed prior to publication.

The deals closed on 4 August.

SMI issued sustainability-linked bonds worth US$380 million, which mature in 2028 and carry a 3.5% interest rate.

This is the first international sustainability-linked bond issuance by a Peruvian business.

As part of the deal, SMI has pledged to increase the percentage of recycled polyethylene terephthalate (PET) in its products and recycle more post-consumer waste. Failure to meet both targets by end of 2023 will result in a 0.25% increase to the bonds’ interest rate, from 3.5% to 3.75%.

SMI used part of the proceeds to fund the tender offer, redeeming US$205 million worth of notes due in 2022 with a 4.5% interest rate. The tender represented 68% of the notes. The company will put the remaining proceeds towards redeeming all untendered notes and repaying other debts.

Under SMI’s sustainability framework, 97% of the plastics used by the company is recyclable and last year it diverted 21,000 tonnes of waste from landfills. The packaging manufacturer aims to reduce the proportion of post-consumer plastic that re-enters the plastic production chain by collecting 34,000 tonnes of waste in 2023 and 55,000 tonnes in 2025.

SMI is a leading rigid plastic packaging solutions company in the Andean region, Central America and the Caribbean. It is owned by Peruvian private equity investor Nexus Group, which also holds Sinea, a Peruvian plastics manufacturer.

Counsel to San Miguel Industrias, Sinea and Nexus Group

In-house counsel to Nexus Group – Guillermo Cabieses, Gustavo Yokoo, Rodrigo Vega and Sebastian Briceño

In-house counsel to San Miguel Industrias and Sinea Group – Julio Pozo and Diana Ticlia

Skadden, Arps, Slate, Meagher & Flom LLP

Partners Alejandro González Lazzeri and Alec Jarvis, counsel Nazmiye Gokcebay, associates Alejandro Asencio, Claudia Garnica Estrada and Cameron Williamson and international associate Elvira Perez in New York

BBGS Abogados (Peru)

Partners Carlos Saco-Vertiz Tudela, Jaime Sabat Pancorvo and Gerardo Guzmán Espino in Lima

Counsel to Citigroup, Credit Suisse, JP Morgan and Santander

Linklaters

Partner Conrado Tenaglia, counsel Alejandro Gordano and Matthew Brigham, associate Bernard YI and international associates Monica Perez-Banuet Farell and Juan Mata in New York

Alemán, Cordero, Galindo & Lee

Partners Arturo Gerbaud and Eloy Alfaro, and associate Rita de la Guardia in Panama City

Consortium Legal (El Salvador)

Partner Oscar Samour and associates Felipe Aragón and Daniel Leiva in San Salvador

Consortium Legal (Guatemala)

Partners Álvaro Castellanos and Diego Alejos in Guatemala City

Payet, Rey, Cauvi, Pérez Abogados

Partners José Cúneo and Vanessa Watanabe, and associates Alan Garcia Nores and Mario Lercari in Lima

Pérez Bustamante & Ponce

Partners Bruno Pineda, Juan Manuel Marchán and Carmen Simone, and associate David Carrera in Quito

Philippi Prietocarrizosa Ferrero DU & Uría (Colombia)

Partner Hernando Padilla and associates Ximena González and Ricardo Díaz in Bogotá

Source: Latin Lawyer

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