Exhibit 99.2
CORPORACION DURANGO, S.A., DE C.V.
Offer to Exchange 13 1/8% Senior Notes Due 2006 and 13 1/2% Senior Notes due
2008
of Corporacion Durango, S.A. de C.V.
For Any and All Outstanding
12 5/8% Notes Due 2003 (CUSIP No. 40050MAA4) of
Grupo Industrial Durango, S.A. de C.V.
(US$250,000,000 Principal Amount Outstanding)
and Solicitation of Consents with respect to Indenture Amendments
THE EXPIRATION DATE OF THE EXCHANGE OFFER IS 5:00 P.M., NEW YORK CITY
TIME, ON AUGUST 27, 2001, UNLESS EXTENDED (SUCH TIME AND DATE, AS THE SAME
MAY BE EXTENDED, THE "EXPIRATION DATE"). TENDERS OF GID NOTES (AS DEFINED
BELOW) IN THE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME ON OR PRIOR TO
AUGUST 27, 2001, BUT NOT THEREAFTER. THE COMPANY RESERVES THE RIGHT TO
EXTEND THE EXCHANGE OFFER AT ANY TIME SUBJECT TO COMPLIANCE WITH
APPLICABLE LAW.
CONSENTS MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE LATER TO OCCUR OF (I)
5:00 P.M., NEW YORK CITY TIME, ON AUGUST 14, 2001, BY MAKING A VALID
WITHDRAWAL OF THE RELATED TENDERED GID NOTES (SUCH TIME AND DATE, THE
"CONSENT DATE") OR (II) THE TIME AND DATE THAT THE COMPANY HAS RECEIVED
CONSENTS TO THE PROPOSED AMENDMENTS FROM THE HOLDERS OF AT LEAST A
MAJORITY OF THE OUTSTANDING AMOUNT OF THE GID NOTES THEN OUTSTANDING. A
WITHDRAWAL OF TENDERED GID NOTES AFTER THE CONSENT DATE WILL NOT
CONSTITUTE A WITHDRAWAL OF A CONSENT.
July 30, 2001
To Broker Dealers, Commercial Banks, Trust
Companies and Depository Trust Company Participants:
Enclosed for your consideration are the prospectus and consent solicitation
dated July 30, 2001 (the "Prospectus"), and the Consent and Letter of
Transmittal (the "Consent and Letter of Transmittal") relating to (i) the
offer (the "Exchange Offer") by Corporacion Durango, S.A. de C.V., a company
organized under the laws of the United Mexican States (the "Company"), to
exchange US$1,030 in principal amount of its 13 1/8% Senior Notes due 2006
(the "2006 Notes") or US$1,030 in principal amount of its 13 1/2% Senior Notes
due 2008 (the "2008 Notes" and, together with the "2006 Notes", the "Exchange
Notes") for US$1,000 in principal amount of the 12 5/8% Notes due 2003 (the
"GID Notes") of Grupo Industrial Durango, S.A. de C.V. ("GID") issued under an
indenture (the "Indenture") dated as of July 25, 1996 between GID and The
Chase Manhattan Bank, as Trustee and (ii) the solicitation for consents (the
"Consents") from the holders of the GID Notes to certain proposed amendments
to the Indenture, in each case, on the terms and subject to the conditions set
forth in the Prospectus and Consent and Letter of Transmittal. Capitalized
terms used herein and not defined herein shall have the same meanings ascribed
to them in the Prospectus.
General
The Company is offering to exchange its Exchange Notes for your GID Notes at
the exchange rate of US$1,030 in principal amount of Exchange Notes, for
US$1,000 in principal amount of your GID Notes. In addition, if the Company
receives a holder's consent prior to the consent date, the Company will pay
the holder a consent payment equal to US$30 per US$1,000 principal amount of
GID Notes payable as described below.
Enclosed Documents
For your information and for forwarding to your clients, for whom you hold
GID Notes registered in your name or in the name of your nominee, we are
enclosing the following documents:
1. Prospectus dated July 30, 2001;
2. Consent and Letter of Transmittal for your use and for the information
of your clients; and
3. A printed form of letter, including a Letter of Instructions, which
may be sent to your clients for whose accounts you hold GID Notes
registered in your name or in the name of your nominee, with space provided
for obtaining such clients' instructions with regard to the Exchange Offer.
The Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9, including such Form W-9, in the case of a U.S. Holder,
and the instructions attached to the Substitute Form W-8 BEN, including such
Form W-8 BEN, in the case of a Non-U.S. Holder, which forms provide
information relating to United States federal income tax withholding, shall be
made available by the Information Agent upon your request.
Holders will only be able to execute tenders and deliver consents through
the DTC Automated Tender Offer Program.
Exchange Offer
A holder may select the form of consideration that it will receive for its
GID Notes from the following two options, subject to the limitations described
below:
. new 13 1/8% senior notes due 2006; and
. new 13 1/2% senior notes due 2008.
Holders do not have to choose the same option for all the GID Notes that
such holders tender. Holders do not have to tender all of their GID Notes to
participate in the Exchange Offer.
The Company will exchange up to a maximum amount of GID Notes for US$50
million in aggregate principal amount of 2006 Notes and US$200 million in
aggregate principal amount of GID Notes for 2008 Notes.
The 2006 Notes will be treated as a single class with the Company's
outstanding US$180.0 million of Senior Notes due 2006 that the Company issued
in February 2001. The CUSIP number of the 2006 Notes is 21986MAA3.
The Exchange Notes will be issued in denominations of US$1,000 principal
amount and integral multiples of US$1,000. Any fractional principal amount of
Exchange Notes which a registered holder is entitled to receive in the
Exchange Offer will be paid in cash.
Either type of the Exchange Notes may be oversubscribed. In the event of
oversubscription, the Company will issue the oversubscribed type of Exchange
Notes on a pro rata basis in exchange for all GID Notes tendered for the
oversubscribed type of Exchange Notes and will issue the other type of
Exchange Notes in exchange for the balance of the tendered GID Notes.
Therefore, a holder may receive a different type of Exchange Note than that
for which the holder tendered for a portion of the GID Notes that such holder
tendered.
The Exchange Notes will pay interest on February 1 and August 1 of each
year, commencing February 1, 2002. Interest on the Exchange Notes will accrue
from August 1, 2001, irrespective of the settlement date of the Exchange
Offer. Interest on the GID Notes for the period from February 1, 2001 to
August 1, 2001 will be paid in cash as scheduled on August 1, 2001. No
separate payment of accrued interest on the GID Notes will be made on the
settlement date of the Exchange Offer.
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The Exchange Offer is conditioned on certain conditions set forth in the
Prospectus under the caption "The Exchange Offer--Termination and Conditions,"
including, among other things, (i) the receipt of tenders from holders of at
least 80% of the outstanding principal amount of GID Notes in this Exchange
Offer and (ii) the absence of certain other events ("Closing Conditions").
Consent Solicitation
In conjunction with the Exchange Offer, the Company is soliciting Consents
to amend the GID Indenture under which the GID Notes were issued to delete
substantially all of the restrictive covenants contained in the GID Indenture.
By tendering their GID Notes in the Exchange Offer, holders will be deemed as
having given their consents to the proposed amendments.
Holders of GID Notes who tender GID Notes on or prior to the Consent Date
will receive a payment in respect of their Consent to the proposed amendments
to the GID Indenture in an amount equal to US$30 per US$1,000 principal amount
of such holder's GID Notes (the "Consent Payment") if all of the Closing
Conditions are satisfied. The Company will pay the Consent Payment in cash to
the extent that the holder of GID Notes receives 2006 Notes or in additional
2008 Notes to the extent that the holder of GID Notes receives 2008 Notes in
the Exchange Offer. The Exchange Notes will be issued in denominations of
US$1,000 principal amount and integral multiples of US$1,000. Any fractional
amount of 2008 Notes which a registered holder is entitled to receive as part
of the Consent Payment will be paid in cash. If the Company does not receive
the requisite Consents, or if the Exchange Offer is not consummated, the
Consent will be deemed revoked, and the holder will not receive the Consent
Payment.
Holders of GID Notes must tender their GID Notes pursuant to the Exchange
Offer in order to validly deliver consents to the proposed amendments pursuant
to the consent solicitation and Holders of GID Notes may not tender their GID
Notes without delivering the related Consent. Tendered Consents may be revoked
at any time prior to the Consent Date. Tenders of GID Notes may be withdrawn
at any time on or prior to August 27, 2001, but not thereafter. A valid
withdrawal of tendered GID Notes prior to August 27, 2001 will not constitute
the concurrent valid revocation of such Holder's Consent after the Consent
Date.
Solicitation Fee
The Company will pay to soliciting dealers a solicitation fee of US$2.50 per
US$1,000 in principal amount of GID Notes tendered, not withdrawn and accepted
for purchase and paid pursuant to the Exchange Offer, provided, that the
aggregate solicitation fee paid to any one soliciting dealer shall not exceed
US$15,000. As used herein, a "soliciting dealer" is an entity covered by a
letter of transmittal which designated its name as having solicited and
obtained the tender, and is:
. any broker or dealer in securities, excluding the dealer manager, which
is a member of any national securities exchange or of the National
Association of Securities Dealers (NASD);
. any foreign broker or dealer not eligible for membership in the NASD
which agrees to conform to the NASD's Rules of Fair Practice in
soliciting tenders outside the United States to the same extent as
though it were an NASD member; or
. any bank or trust company.
No such fee shall be payable to a soliciting dealer with respect to the
tender of GID Notes by a holder unless the Notice of Solicited Tenders
accompanying such tender designates such soliciting dealer. No such fee shall
be payable to a soliciting dealer in respect of GID Notes registered in the
name of such soliciting dealer unless such GID Notes are held by such
soliciting dealer as nominee and are being tendered for the benefit of one or
more beneficial owners. No such fee shall be payable to a soliciting dealer if
such soliciting dealer is required for any reason to transfer the amount of
such fee to a depositing holder (other than itself). No such fee shall be paid
to a soliciting dealer with respect to GID Notes tendered for such soliciting
dealer's own account.
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No broker, dealer, bank, trust company or fiduciary shall be deemed to be the
agent of the Company, DTC, the Dealer Manager or the Information Agent for
purposes of the Exchange Offer. For all purposes noted in all materials
related to the Exchange Offer, the term "solicit" shall be deemed to mean no
more than "processing GID Notes tendered" or "forwarding to customers
materials relating to the Exchange Offer."
The Company will also, upon request, reimburse soliciting dealers for
reasonable and customary handling and mailing expenses incurred by them in
forwarding materials relating to the Exchange Offer to their customers.
The Company will also pay all transfer taxes, if any, applicable to the
exchange of GID Notes pursuant to the Exchange Offer. If, however, our
Exchange Notes or GID Notes for principal amounts not tendered or accepted for
exchange are to be issued in the name of any person other than the registered
holder of the GID Notes tendered, or if tendered GID Notes are registered in
the name of any person other than the person for whom the agent's message is
being transmitted, or if a transfer tax is imposed for any reason other than
the exchange of GID Notes pursuant to this Exchange Offer, then the amount of
any transfer taxes imposed on the registered holder or any other persons will
be payable by the tendering holder. If satisfactory evidence of payment of
taxes or exemption therefrom is not submitted to the Exchange Agent, the
amount of transfer taxes will be billed directly to the tendering holder.
IN ORDER FOR A SOLICITING DEALER TO RECEIVE A SOLICITATION FEE, THE CHASE
MANHATTAN BANK AS EXCHANGE AGENT, MUST HAVE RECEIVED FROM SUCH SOLICITING
DEALER A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF SOLICITED TENDERS IN
THE FORM ATTACHED HERETO (OR FACSIMILE THEREOF) WITHIN THREE BUSINESS DAYS
AFTER THE EXPIRATION OF THE EXCHANGE OFFER.
Conclusion
We urge you to contact your clients promptly in order to obtain their
instructions. Please note that the Exchange Offer will expire on the
Expiration Date.
Any inquiries you may have with respect to the Exchange Offer should be
addressed to Banc of America Securities LLC, the exclusive Dealer Manager and
Solicitation Agent for the Exchange Offer, at its address and telephone number
as set forth on the final page of the Prospectus and the Consent and Letter of
Transmittal. Additional copies of the enclosed materials may be obtained from
The Chase Manhattan Bank, the Exchange Agent for the Exchange Offer, at its
address and telephone number as set forth on the inside back cover of the
Prospectus and the Consent and Letter of Transmittal.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
THE AGENT OF THE COMPANY, THE DEALER MANAGER AND SOLICITATION AGENT OR THE
EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR
MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE EXCHANGE
OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED
THEREIN.
Very truly yours,
Banc of America Securities LLC
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CORPORACION DURANGO, S.A. DE C.V.
NOTICE OF SOLICITED TENDERS FOR THE
GID NOTES (CUSIP NO. 40050MAA4)
List below the aggregate principal amount of GID Notes tendered by each
beneficial owner whose tender you have solicited. All GID Notes beneficially
owned by a beneficial owner, whether in one account or several, and in however
many capacities, must be aggregated for purposes of completing the table
below. Any questions as to what constitutes beneficial ownership should be
directed to the Exchange Agent. If the space below is inadequate, list the GID
Notes in a separate signed schedule and affix the list to this Notice of
Solicited Tenders.
ALL NOTICES OF SOLICITED TENDERS SHOULD BE DETACHED BY TEARING ALONG THE
PERFORATED EDGE AND RETURNED TO THE EXCHANGE AGENT AT THE ADDRESS SET FORTH ON
THE BACK COVER OF THE CONSENT AND LETTER OF TRANSMITTAL WITHIN THREE BUSINESS
DAYS AFTER THE EXPIRATION OF THE OFFER. NOTICES MAY BE FAXED TO THE EXCHANGE
AGENT BY ELIGIBLE INSTITUTIONS AT ((212) 638-7375 (ATT: VICTOR MATIS) OR
(212) 344-9367 (ATT: KENNETH STEVENS)). ALL QUESTIONS CONCERNING THE NOTICES
OF SOLICITED TENDERS SHOULD BE DIRECTED TO THE INFORMATION AGENT AT THE
TELEPHONE NUMBER SET FORTH ON THE BACK COVER OF THE CONSENT AND LETTER OF
TRANSMITTAL.
ALL SOLICITING DEALERS ARE REQUIRED TO COMPLETE THE FOLLOWING. PLEASE TYPE
OR PRINT NEATLY.
Principal Amount of
DTC Participant VOI Ticket Notes Tendered Number of
Number Number* for Exchange Beneficial Owner(s) Represented
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
* Complete if GID Notes delivered by book-entry transfer. Please submit a
separate VOI ticket for GID Notes tendered when the solicitation fee is to
be directed to another Soliciting Dealer.
DO NOT SEND GID NOTES WITH THIS FORM. YOUR GID NOTES MUST BE TENDERED VIA
DTC'S ATOP SYSTEM.
PLEASE COMPLETE THE SIGNATURE FORM ON THE LAST PAGE.
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SOLICITATION FEE PAYMENT INSTRUCTIONS
ISSUE CHECK TO:
Firm ____________________________________________________________________
(Please Print)
Attention _______________________________________________________________
Address _________________________________________________________________
_________________________________________________________________________
(Include Zip Code)
Phone Number ____________________________________________________________
Taxpayer Identification or Social Security No. __________________________
Applicable VOI Number __________ Principal Amount of GID Notes __________
IF SOLICITATION FEES ARE PAID TO ANOTHER ELIGIBLE INSTITUTION(S), PLEASE
COMPLETE THE FOLLOWING BOXES:
ISSUE CHECK TO:
Firm ____________________________________________________________________
(Please Print)
Attention _______________________________________________________________
Address _________________________________________________________________
_________________________________________________________________________
(Include Zip Code)
Phone Number ____________________________________________________________
Taxpayer Identification or Social Security No. __________________________
Applicable VOI Number __________ Principal Amount of GID Notes __________
ISSUE CHECK TO:
Firm ____________________________________________________________________
(Please Print)
Attention _______________________________________________________________
Address _________________________________________________________________
(Include Zip Code)
Phone Number ____________________________________________________________
Taxpayer Identification or Social Security No. __________________________
Applicable VOI Number __________ Principal Amount of GID Notes __________
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NOTE: IF ADDITIONAL PAYMENT INSTRUCTIONS, PLEASE COPY AND ATTACH.
All questions as to the validity, form and eligibility (including time of
receipt) of Notices of Solicited Tenders will be determined by the Exchange
Agent, in its sole discretion, which determination will be final and binding.
Neither the Exchange Agent nor any other person will be under any duty to give
notification of any defects or irregularities in any Notice of Solicited
Tenders or incur any liability for failure to give such notification.
The undersigned hereby confirms that: (i) it has complied with the
applicable requirements of the Securities Exchange Act of 1934, as amended,
and the applicable rules and regulations thereunder, in connection with such
solicitation; (ii) it is entitled to such compensation for such solicitation
under the terms and conditions of the Exchange Offer; (iii) in soliciting
tenders of GID Notes, it has used no soliciting materials other than those
furnished by the Company; and (iv) if it is a foreign broker or dealer not
eligible for membership in the NASD, it has agreed to conform to the NASD's
Rules of Fair Practice in making solicitations.
Firm Name: __________________________________________________________________
By: _________________________________________________________________________
Title: ______________________________________________________________________
Address (Including Zip Code): _______________________________________________
Area Code and Telephone Number: _____________________________________________
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