Stirol Gets a Covenant Breach Waiver from BSTDB

Yesterday SunStreamNews said that Stirol (STIR: SELL) has obtained a covenant breach waiver from the Black Sea Trade & Development Bank (BSTDB). BSTDB waived the covenant breaches related to the “Negative Pledge” and “Related Party Transactions” provisions under their loan agreement. The bank also waived covenants contained in the provision “Event of Default,” given Stirol is in the process of negotiating with Moscow Narodny Bank (MNB) on breaches to the $125 mln loan agreement between Stirol and MNB. Vladimir Nesterenko: Stirol appears to be trying to soften its Eurobond holders’ attitude after neglecting them earlier this year when the company did not provide its 2005 IFRS audit report in due time and effectively concealed a number of covenant breaches under loan agreements with BSTDB and MNB. The $125 mln loan received from MNB was funded through loan participation notes (Eurobonds) issued by Stirol’s SPV, UkrChem Capital B.V. As earlier, we do not expect MNB to demand an early redemption (see our report from August 10), but if it does, Stirol’s 3Q06 financials suggest it is ready to pay. Please visit Stirol’s web site or contact us for copies of the documents mentioned throughout this text.