Mexico's Alfa to pay down $500 mln of debt in move toward Alpek spin-off
Adds details in paragraph 2 onwards
MEXICO CITY, Sept 10 (Reuters) -Mexican conglomerate Alfa ALFAA.MX said on Tuesday that it plans to pay off $500 million of debt with a capital increase and a cash dividend from its chemical subsidiary Alpek ALPEKA.MX, which it hopes to spin off.
The company also announced a formal consent solicitation process and related exchange offer for the holders of its $500 million of senior notes due in 2044.
WHY IT'S IMPORTANT
Alfa has been pursuing a spin-off of Alpek, but the company's high debt has been one of the main obstacles it has faced in splitting off the petrochemical subsidiary.
KEY QUOTE
"The capital increase and the consent process are decisive steps for our corporate simplification," Alfa Chief Executive Alvaro Fernandez said in a statement.
CONTEXT
The firm will propose a $400 million capital injection that would require the approval of shareholders at a meeting later this month, Alfa said. The additional $100 million will come from an Alpek dividend.
Shares in Alfa closed up more than 17% on Mexico's main stock index .MXX on Tuesday after it launched the exchange offer for its notes, but before it detailed its capital increase plans.
Alpek, which is listed on another index of the Mexican stock market, saw its shares rise nearly 4%.
Reporting by Kylie Madry; Editing by Aida Pelaez-Fernandez and Jamie Freed
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