Ferrexpo increases cash payment for Eurobonds exchange to 25%

Ukraine’s largest pellet exporter Ferrexpo (FXPOLN) announced on Feb. 6 that it has amended the terms for its exchange offer on its USD 500 mln Eurobonds maturing in April 2016. The company has increased its outright cash payment to those bondholders who will agree to exchange to 25%, from 20% initially. It has also extended the deadline for receiving consent for the second time in a row to Feb. 20 from Feb. 17 a day before. According to the issuer’s statement, only 34.17% of bondholders have agreed to its exchange offer, as of Feb. 5.

Roman Topolyuk: The number of bondholders who have agreed so far isn’t enough to match Ferrexpo’s debt repayment schedule with its projected operating cash flow. We estimate the company needs to get at least a 55% approval rate to be able to change its debt profile to a safer mode. The new offer implies an IRR of 25% compared to the previous one of 24%, which is closer to the  YTM offered by Ukraine’s sovereign bonds.