Interpipe launches restructuring of its debt

Ukraine’s largest pipe producer Interpipe (INPIP) has
launched the restructuring of its debt, according to documents filed with U.S.
Securities and Exchange Commission on Aug. 15. The company commenced consent
solicitation on Aug. 14 with a deadline of 10 a.m. London time on Aug. 27, on
which date it will announce the results.

 

Within the solicitation, the company offers the
holders of its existing notes, per USD 1,000 of the notional existing note
amount, the combination of the following considerations: (a) USD 410.53 in new
notes; (b) about USD 108 in restructuring fees, according to Concorde Capital
preliminary estimates; and (c) a 0.0041 share of a so-called performance
security.

 

The nominal value of the new notes and the number of performance
securities issued for the benefit of holders of the existing notes will be USD
82.1 mln and 821, respectively, so that holders of USD 1,000 of new notes will
receive a 0.01 share of a performance security.

 

The new notes will bear 10.25% interest and will
mature on Dec. 31, 2024, with USD 150 mln to be redeemed on Dec. 31, 2023.

 

The performance securities will pay owners the larger
of (a) 15% of Interpipe’s adjusted EBITDA and (b) 22.5% of its so-called
adjusted cashflow (essentially net operating cash flow before interest less
CapEx) during years 1 to 4. The EBITDA/cashflow percentages increase to 20% and
27.5% for years 5 to 7, and to 25% and 33% for years 8 to 10.

 

The total notional amount of the new notes and the
total number of performance securities, to be issued to the holders of existing
notes and to other creditors, will be determined after Sept. 6. The effective
record date for Noteholders to receive the Restructuring Fee is expected to be
Sept. 12, and the fees are expected to be paid on Sept. 19.

 

Dmytro Khoroshun: The
parameters of the restructuring deal that concern the holders of the existing
notes are roughly in line with what was reported previously.

 

One difference from what we expected from reports in
the media is that the part of the restructuring fee that corresponds to
interest accrued from February 2018 is calculated on the notional amount of the
new notes rather than the notional amount of the existing notes.

 

We plan to describe Interpipe’s offer in further
detail in an upcoming note.