Metinvest raises USD 300 mln in pre-export financing

Metinvest (METINV), Ukraine’s largest vertically integrated steel maker, announced on Dec. 3 that it secured a USD 300 mln pre-export debt financing 3-year facility. The line was secured at a rate of 5.25% over LIBOR with a grace period of one year. The company stated that the debt financing was arranged for CapEx projects and general purposes. Metinvest reported it planned initially to raise up to USD 225 mln, but the attracted debt amount increased owing to lenders’ large appetite.

Roman Topolyuk: The secured facility is priced 50 bp higher than the previous USD 325 mln PFX line arranged in May 2012 (at 4.75% over LIBOR), reflecting increased risk estimates for a sector in which the demand trends are worsening. Taking into account the current market uncertainty, we estimate that Metinvest will draw funds from the secured line cautiously – mainly for working capital purposes than for CapEx. Once the facility is fully drawn, the projected net debt to EBITDA will be around 1.8-1.9x. The range is higher than that of Severstal (1.6x), but much lower than that of Evraz (2.9x), as well as Metinvest’s debt covenant (3x).