Metinvest launches another consent solicitation

Metinvest (METINV), Ukraine’s largest steel and iron
ore producer, proposed to the holders of its METINV’26 and METINV’27 notes
amendments to certain terms and conditions that govern restricted payments,
according to a consent solicitation announcement distributed on Dec. 21.

 

Metinvest intends to pay a fee to noteholders who will
deliver their consent by the early consent deadline (indicatively, 4pm London
time on Jan. 7), provided certain conditions are met, including that the
resolutions with respect to all tranches are passed. The consent fee is 1.10%
of the principal note amount for the METINV’26 tranche and 1.25% for the
METINV’27 tranche.

 

Some other items of the indicative timetable for the
deal are: launch date, Dec. 21; record date, 10pm London time on Jan. 6;
expiration time, 11am and 11.15am (depending on the tranche) London time on
Jan. 11; start of noteholder meetings, 11am and 11.15am (depending on the
tranche) London time on Jan. 13; announcement of results, Jan. 13; consent fee
payment date, not later than five business days after the announcement of the
satisfaction of certain conditions.

 

Recall, within the previous consent solicitation
launched a month ago, Metinvest achieved the consent of the holders of its three
other note tranches (METINV’23, METINV’25, METINV’29) for
the same amendments. However, certain noteholders encountered difficulties in
submitting their meeting-related documents in time for them to count. As a
result, the resolution in respect of the METINV’26 tranche was not passed at
the meeting. Furthermore, the meeting of METINV’27 holders passed the
resolution, but the Eligibility Condition (the quorum required and the
requisite majority of votes cast) was not satisfied.

 

Regarding the amendments to be voted on by the
noteholders, Metinvest proposes that it not be limited in its restricted
payments if its net leverage ratio (pro forma following the payments) is below
1x, and will be limited to paying out the aggregate of 100% of its consolidated
net income (CNI) accrued since the beginning of 2017 if its net leverage ratio
is between 1x and 2.25x. If its net leverage ratio is between 2.25x and 3x,
Metinvest will be limited to paying out the aggregate of 50% of its CNI accrued
since the beginning of 2017.

 

Currently, Metinvest is unable to make any restricted
payments if their aggregate exceeds 50% of its CNI accrued since the beginning
of 2017 without any reference to its leverage.

 

Restricted payments include dividends and other
distributions, certain investments (including acquisitions of minority
interests in other entities), and the purchase or redemption of equity
interests and subordinated indebtedness, the announcement said.

 

Dmytro Khoroshun: We expect
that the noteholders will approve the amendments.

 

This is because these amendments have already been
approved by the holders of Metinvest’s three note tranches, who likely are in
large part the same investors as the holders of the remaining two tranches.
Furthermore, Metinvest seems confident enough in its dealings with the holders
of the remaining two tranches as to have launched this latest consent
solicitation without hiking the consent fee amounts.

 

We maintain our neutral view on METINV bonds.