Ferrexpo receives exchange consent from 43% of holders of 2016 notes

Ferrexpo receives exchange consent from 43% of holders of 2016 notes



24 лютого 2015 года
Конкорд Капитал

Ferrexpo (FXPO)


Ukraine’s largest iron ore pellet producer Ferrexpo (FXPOLN) received consent from 43% of the holders of its USD 500 mln notes maturing in April 2016, according to the company’s Feb. 23 statement. The exchange offer – amended on Feb. 6 – foresees a 25% outright cash payment of the principal and an exchange of the rest for new notes having a 2.5pp higher coupon rate and repayable in two equal installments in April 2018 and April 2019.



The consent rate came in lower than the initially set “minimum participation condition” of 60%. However, the company decided to proceed with implementing the exchange offer. Thus, Ferrexpo will issue new Eurobonds worth USD 160.7 mln with a coupon of 10.375% and pay cash consideration of USD 53.6 mln on or about Feb. 24 to bondholders who agreed to the offer.



Roman Topolyuk: The improvement of the offer’s initial conditions, according to which the initial cash payment increased to 25% from 20%, helped to increase the approval rate by just 9pp. The result is 2pp lower than our 45 percent estimate, which would have been enough for Ferrexpo to avoid liquidity gaps in 2016. But having reached a deal with public lenders, which is a kind of soft restructuring, the company will be able to negotiate with banking lenders for additional funding, once it is needed.



With the exchange offer implemented, Ferrexpo’s debt profile looks less susceptible to possible weakening of the iron ore market. We reiterate our neutral view on FXPOLN, which will largely depend on the path that iron ore prices take after the Chinese New Year holidays at the end of February.

Источник: Конкорд Капитал

Аналитик: Роман Тополюк
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