Interpipe to present an updated business plan to creditors early July
25 June 2015
Ukraine’s largest steel pipe producer Interpipe (INPIP) will present a renewed business plan to creditors in the beginning of July, Debtwire reported on June 24. Three lenders – including Commerzbank, ING and Italy’s export credit agency SACE – comprise the ad hoc lender group, according to Debtwire. The company’s total debt stood at USD 1,026 mln, being fully current as of end-2013, or the date of the most recent available financial statement.
Interpipe’s financial stance deteriorated significantly after Russia, previously the most important market for Interpipe, didn’t extend its import quota for duty-free supplies of pipes for 2H13 and instead imposed around a 19% import duty on Interpipe’s products. The company’s negotiations with creditors ceased in September 2014 after banking lenders demanded that its Eurobond holders should be included in the perimeter of the talks. Interpipe hasn’t been servicing its debt since February 2015.
Interpipe subsidiaries produced 156 kt of steel pipes in 4M15, which is 37% lower yoy and by 51% lower compared to 4M13, according to Metal Courier, a Ukrainian trade publication.
Roman Topolyuk: Interpipe’s Eurobonds have been trading at a huge discount since March (27 cents per dollar currently), reflecting the company’s worsened business environment. The business plan that will be considered in July will serve as a starting point for discussions with lenders. Despite the effective loss of the Russian market (with import duties overlapping its EBITDA margin), which represented more than 30% of Interpipe’s sales previously, the company is able to retain its market positions in the Middle East region and North America. Therefore, it has the potential to continue as a going concern. However, its current debt pile of USD 1 bln (implying total debt-to-EBITDA above 5x) puts at risk the sustainability of its operations. Therefore, certain concessions from lenders aimed at easing the debt burden may be requested by the company. In particular, we do not rule out that some haircut will be offered.
