Ferrexpo prepares to draw down USD 195 mln loan

The shareholders of Ferrexpo Poltava Mining (FPM), the
main asset of iron ore miner Ferrexpo (FXPO LN, FXPOLN), approved at a Dec. 11
EGM the company’s signing the documents necessary to finalize the arrangement
of the USD 195 mln revolving pre-export facility announced on Nov. 17. In detail,
FPM obtained permission to sign the suretyship deed and assignment of contracts
by way of security, as well as any other documents related to the PXF facility
deal.

Dmytro Khoroshun: As a result
of the EGM decisions, Ferrexpo is ready to draw down the loan, which will be a
critical improvement of its short-term liquidity situation. As of June 30, the
company had USD 93 mln in cash and equivalents, whereas its short-term debt
payout schedule amounted to about USD 326 mln, including USD 170 mln in
Eurobond principal, as well as four equal USD 34 installments of the USD 135
mln outstanding in relation to the PXF loan arranged in 2013-2014 and USD 18
mln in Export Credit Agency loans.

Once Ferrexpo draws down USD 195 mln of the most
recent PXF, which we expect soon, the company should have secured short-term
debt repayments, including the Eurobond principal coming due on Apr. 7, 2018.
Nevertheless, we retain our neutral view on Ferrexpo bonds, seeing both upside
and downside risks to their price staying balanced.