Ferrexpo publishes exchange offer for remainder of its 2016 notes

Iron ore pellet producer Ferrexpo (FXPOLN) announced an exchange offer and consent solicitation to the holders of its 2016 notes on May 28. In particular, it offers to exchange the notes maturing on April 7, 2016 into 35% in cash and 65% in new notes that will be repaid in two equal installments on April 2018 and April 2019. The coupon rate for the new notes is offered at 10.375%, significantly higher than for the existing notes at 7.875%.

The company offered a 2.0% early consent fee for those who agree to the exchange by the early deadline of June 15, or 0.5% in base consent fee for meeting the final deadline on June 30.

In January 2015, Ferrexpo already offered to exchange its USD 500 mln Eurobonds due in April 2016 into cash (25%) and new notes that will be repaid in two equal installments in April 2018 and April 2019. Only 43% of holders agreed to the exchange, and Ferrexpo ended up exchanging only USD 214 mln in notes into cash (USD 53.6 mln) and the new notes (USD 160.7 mln) in February 2015.

This time, the company is going to exchange the remaining USD 286 mln in 2016 notes into the same newly issued notes, but now it is offering a bigger cash down payment (35%), as well as early (and basic) consent fees, which were not offered earlier.

In addition, Ferrexpo offered a consent solicitation to amend some conditions of the 2016 notes, with no details provided in the press release. It is also offering 2% and 0.5% consent solicitation fees for those who cast their votes in favor of the extraordinary resolutions by the early and late deadline, respectively.

Alexander Paraschiy: What effectively is being offered by Ferrexpo is to exchange each USD 100 of par value of its 2016 bond into USD 37 in cash (if exchanged by the early deadline) and 65% of its 2019 Eurobond, which is currently priced at USD 83.6. If this exchange is made immediately, the owner of the 2016 bond (which is priced right now at just USD 87.9) will receive cash and paper worth USD 91.3 totally.

While we have yet to see the memorandum with details on the exchange offer and amendment of 2016 bond’s conditions, at this stage we believe the exchange should be a good deal for most of the remaining holders of the 2016 notes.

Источник: Конкорд Капитал