NEW YORK – Aug. 18, 2017 – Global law firm Greenberg Traurig, LLP represented the steering committee of bondholders of Cap Cana, S.A., a luxury resort developer in the Dominican Republic that defaulted on two series of its outstanding secured notes. As steering committee counsel, Greenberg Traurig structured an innovative transaction whereby Cap Cana would make an offer to holders of its existing secured notes to exchange such notes for 10 percent secured notes to be issued by a newly-formed special-purpose entity in the Cayman Islands, Caribbean Debt Recovery, Ltd.
The steering committee members, and certain other holders of Cap Cana’s existing notes, which together held more than 50 percent of the outstanding principal amount of the notes, entered into a lock-up agreement and committed to tender into the exchange offer, subject to certain conditions. Cap Cana transferred undeveloped resort properties in the Dominican Republic to wholly owned subsidiaries of the issuer of the new notes, and the issuer entered into agreements to market and sell such properties, the proceeds of which will repay the holders of the new notes. The steering committee members also provided a credit facility to the issuer for the purposes of providing working capital until such time as properties are sold.
In connection with the exchange offer, the bondholder parties to the lock-up agreement also agreed to direct the trustee under the existing indentures to foreclose on the collateral securing the old notes. Completion of the foreclosure process, including all appeals, was a condition precedent to the closing of the exchange offer.
Holders of approximately 98 percent of the old notes tendered into the exchange offer and approximately $212 million of new notes were issued in exchange for the old notes. The new notes were offered in the United States in reliance on private placement exemptions under the Securities Act and outside the United States in reliance on Regulation S under the Securities Act. Because Cap Cana acquired substantially all of the old notes in the exchange offer, it was able to retire nearly all of the debt represented by such notes and, through the foreclosure process, ensure that the collateral securing such notes was released while retaining 98 percent of the economic benefit of the liquidation proceeds from the collateral.
The Greenberg Traurig team was led by Corporate Shareholders Marc M. Rossell (New York) and Drew M. Altman (Miami).
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