Metinvest gets OK to extend, waive defaults for 10¼% notes due 2015

By Toni Weeks

San Luis Obispo, Calif., June 26 – Ukraine’s Metinvest BV said it received enough consents at a noteholders meeting on June 26 to amend its $113,651,000 of 10¼% guaranteed notes due 2015.

The company had held meetings on June 1 to seek consents for an aggregate $1,153,000,000 of three series of bonds, comprised of the 2015 notes as well as its $289,734,000 of 10½% guaranteed notes due 2017 and $750 million of 8¾% guaranteed notes due 2018.

At the June 1 meetings, the proposals were passed for the 2017 bonds and the 2018 bonds. For the 2015 bonds, however, the quorum was not present at the meeting, and the meeting was adjourned to June 26 for that series.

The amendments and waiver under the terms of the consent solicitation for each of the 2017 and 2018 notes was conditional upon the extraordinary resolution for the 2015 notes being passed, which has now been satisfied.

Background

The company solicited consents for the 2015 notes to extend the maturity to Jan. 31, 2016 and to approve a waiver of certain ongoing and potential events of default, including the failure to pay the principal and interest that was due and payable on May 20, and some amendments and waivers of ongoing and potential events of default in relation to the 2017 notes and 2018 notes.

Metinvest previously said that based on its existing liquidity position, its current cash flow projections and the significant liquidity risk related to withdrawals of its trade finance facilities, it only had sufficient headroom to carry out operating activities and pay interest and coupons under its bank facilities and bonds, but not to pay amounts of principal falling due under the PXF facilities or repay the principal amount falling due under the 2015 notes on May 20. The PXF facilities are comprised of four loan facilities arranged in 2011 through 2013 for an aggregate amount of $2,185,000,000.

The company said that if the principal amount outstanding under the 2015 notes was to immediately become due and payable on May 20, the negotiation of a standstill and waiver agreement with the PXF lenders might be suspended, and Metinvest may potentially face further adverse consequences under its bank facilities or other outstanding bonds if the creditors of those instruments decide to exercise any rights to declare further events of default under those instruments and/or declare the loans or bonds prematurely due and payable.

Should creditors seek to exercise their rights, Metinvest could potentially be forced to seek court protection in order to safeguard continuity of the business and survival of the group as a whole. A court protection order could potentially result in the suspension of debt service to the issuer’s creditors, including coupon and interest payments under the notes, other outstanding bonds and the PXF facilities.

According to a previous filing with the London Stock Exchange, the company had begun a similar consent solicitation for the notes on April 8, but the quorum required for a May 1 noteholder meeting was not obtained, and, as a consequence, the consent solicitation did not pass. Metinvest withdrew those proposals and instead began a new consent solicitation, with the meetings scheduled for June 1 in London.

2015 notes

The company said previously that the consent payment for noteholders who delivered their consents would be $5.00 per $1,000 principal amount, consisting of an amount of $2.50 per $1,000 for the extension of maturity of the notes and other amendments and the other half for the waiver.

Because the measure passed, the issuer will redeem the remaining 2015 notes at their principal amount in two installments: first, an installment of $28,412,750 payable within three business days, then the remaining $85,238,250 payable on Jan. 31, 2016.

The measure needed to be approved by a majority of noteholders consisting of at least 75% of the votes cast.

2017 and 2018 notes

The amendments and waiver under the terms of the consent solicitation for each of the 2017 and 2018 notes was conditional upon the extraordinary resolution for the 2015 notes being passed and no action being taken by creditors of the issuer under the 2015 notes, the PXF facilities, and for the other (2017 or 2018, as applicable) series of notes to enforce their rights in the event of a payment default in the case of the 2015 notes. They were also conditional on the 2017 and 2018 noteholders waiving certain events of default or potential events of default and the 2015 noteholders waiving certain events of default of potential events of default and approving an extension of maturity for the 2015 notes.

The issuer said it would pay a consent amount of $2.50 per $1,000 principal amount of 2017 and 2018 notes held if the extraordinary resolution was passed and the waiver and amendment condition was satisfied for each of the 2017 and 2018 notes. To be successful, the extraordinary resolution needed to be passed at a noteholders meeting by a majority consisting of not less than two-thirds of the votes cast for the 2017 notes or by 75% of the votes cast for the 2018 notes.

The issuer and its subsidiaries operate a vertically integrated mining and steel business in Ukraine, and its business has been hurt by the “significant civil disturbances and political instability as well as the ongoing military action in the country,” a previous news release noted.

The tabulation agent was the Bank of New York Mellon (+44 0 1202 689 644, Les Cummings, debtrestructing@bnymellon.com or 315 414-3349, Dacia Brown-Jones, ct_reorg_unit_inquiries@bnymellon.com).

The principal paying agent was Bank of New York Mellon, London Branch (fax: +44 0 1202 689 644, Les Cummings, debtrestructuring@bnymellon.com). The U.S. paying agent was Bank of New York Mellon, New York (Dacia Brown-Jones, 315 414-3349, ct_reorg_unit_inquiries@bnymellon.com).

Metinvest is an integrated mining and steel business based in Donetsk, Ukraine.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.