Agroton offers to extend bond till 2019, cut coupon to 8% from 12.5%

Farming company Agroton (AGTPW) offered new terms for its USD 50 mln bonds issued in 2011. The amendment, released on July 17, proposes (1) extending the bond repayment from July 2014 to July 2019, (2) cutting its coupon from 12.5% to 8.0% starting June 2013, (3) postponing its recent coupon payment (due July 14, 2013) by six months, (4) loosening its net debt/EBITDA covenant from 3.0 to 4.0, (5) and extending the company’s allowed additional indebtedness from USD 5 mln to USD 20 mln. The company will avoid bankruptcy if all these amendments are approved by 75% of votes at a special bondholders meeting on August 8.

Following the news, Fitch downgraded Agroton’s credit rating from CCC to C, naming Agroton’s proposed conditions a “distressed debt exchange.” The agency can further downgrade the rating to RD or D and expects no developments in the short term that would cause it to upgrade the rating.