Metinvest on track to successfully restructure and refinance

2018/4/5 0:28:24

Analyst: “Summarily, the early tender and consent results speak highly of Metinvest’s ability to reach a deal with the markets.”

 


KYIV, Apr 5, 2018.-. Metinvest (METINV), Ukraine’s largest steelmaker, announced on Apr. 4 that the holders of 97% (USD 1,149 mln out of USD 1,187 mln outstanding) of its METINV'21 Eurobond consented to amending its conditions. Additionally, Metinvest reported that the amount of USD 1,068 mln (90%) of the METINV'21 Eurobond was tendered by the early tender deadline of Apr. 3. The tender offer will expire on Apr. 19 and is subject to conditions, including the successful issue of new Eurobonds, Metinvest said.

 

Recall, the portion of the METINV'21 Eurobond not tendered-in will become a vanilla, bullet-redemption note with a coupon rate in line with the rate achieved for the new Eurobonds.

 

In separate news, Bloomberg reported indicative yields for the new Eurobonds to be around 8% for the five-year METINV'23 Eurobond and 8.5-9.0% for the eight-year METINV'26 Eurobond.

 

Concorde analyst Dmytro Khoroshun added: “Because the required minimum threshold for the amendments to be implemented is 75% of notes outstanding, the restructuring part of the deal proposed by Metinvest on March 19 will be successful.

 

 The share of the METINV'21 Eurobond tendered for purchase, 90%, indicates that Metinvest offered yields on its new Eurobonds that were attractive to the markets. Based on the indicative METINV'23 yield reported by Bloomberg and the formula the noteholders consented to, the rate on the restructured METINV'21 Eurobond will be 7.5%, provided METINV'23 Eurobond mature in April 2023. An official announcement on the yields on the new METINV'23 and METINV'26 Eurobond, as well as the interest rate for the restructured METINV'21 Eurobond, is expected today, Apr. 4.

 

We remind our clients that those who met both the consent and early tender deadlines on Apr. 3 will receive 105.25% of par on the settlement date (expected Apr. 23). Those who met only the consent deadline but decide to tender by Apr. 19 will receive 101.5% of par. The noteholders who did not consent but met the early tender deadline will receive 104.25% of par. Finally, those who consented but decide not to tender their notes will receive a 1.0% of par fee.

 

 Regarding the result of the deal for the METINV'21 noteholders, we recall that our fair value estimate was in the range of 104.9-109.1% of par. We need to wait and see how the new METINV'23 and METINV'26 Eurobonds begin trading in order to make the final judgement. If the new Eurobonds appreciate early on, this appreciation might be counted toward the total value recovered from the old METINV'21 Eurobond.

 

It would be logical for Metinvest to pass part of the value to the METINV'21 holders by offering the new Eurobonds at attractive yields, so that they are ready to appreciate immediately after issuance. This is because the amount Metinvest needs to raise with new notes is expected to be substantially larger than the amount of old notes outstanding, and the new notes need to be attractive for the pool of new investors.

 

Alternatively, if the new notes do not appreciate immediately, then we are surprised that the METINV'21 holders settled for such a low value of 105.25%. In this regard, we note that we expected the METINV'23 yield around 8.6%, that is, 60 bps higher than the indicative yield reported by Bloomberg.

 

Summarily, the early tender and consent results speak highly of Metinvest’s ability to reach a deal with the markets.

 

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For more information, link here: www.concorde.ua 

 

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