Holders of METINV’18 mull idea to unite all bond issues into one

The ad hoc bondholder committee of Ukraine’s largest steel maker and iron ore miner Metinvest (METINV) has hired Blackstone as a financial adviser and Linklaters as the law firm in its upcoming debt restructuring talks, Debtwire reported on Aug. 11. The negotiations regarding the rescheduling of USD 1.1 bln in bonds and USD 1.1 bln in PXF loans are likely to begin in September.

The members of the ad hoc committee mostly represent the holders of Metinvest’s biggest and longest bond, USD 750 mln, maturing in 2018, according to the Debtwire report. The other bonds are USD 289 mln maturing in 2017 and USD 85 mln maturing in 2016. The holders of the longest bonds favor an idea to convert all the issues into a single bond, with extended maturity.

Roman Topolyuk: Metinvest has been one of the names most negatively impacted by the warfare in Donbas in the local universe. The plunge in global iron ore and steel prices are causing even more pressure on the company’s earnings. Despite all these negative developments, Metinvest remains one of the least indebted borrowers in Ukraine’s fixed income universe, as its total debt-to-LTM EBITDA stood at 1.3x, as of March 2015. Even with reduced operating cash flow in 2015, the holding will be able to fully repay its debt in five to six years, we estimate.

Clearly, the idea of uniting all three Eurobond issues into a single one would be hard to accept for the holders of the shorter notes. That said, we agree with Debtwire's conclusion that there could be some conflict of interest among the bondholders. In any case, we believe the holding and creditors will find a mutually beneficial solution by the year end.

These days, it’s more critical for Metinvest to agree on restructuring its PXF debt, more than USD 178 mln of which is already overdue, and more than USD 400 mln of which will mature by January 2016.

Источник: Конкорд Капитал