Metinvest launches tender for 2021, 2023 bonds

Metinvest (METINV), Ukraine’s largest steelmaker,
offered the holders of its METINV’21 and METINV’23 notes to purchase them with
funds coming from the issuance of a new tranche, according to a tender
announcement published by Metinvest on Sept. 15.

 

Metinvest is also asking the holders of its METINV’21
notes to consent to changes in its terms and conditions to allow Metinvest to
redeem early all of these notes (USD 115.3 mln currently outstanding) at 100
percent of nominal, according to the announcement. The consent of 75% of
METINV’21 noteholders is required for the terms to be changed, and Metinvest
disclosed in its announcement that it has received from a holder of USD 80.8
mln of METINV’21 notes an indication of its intention to participate in the
tender. Therefore, Metinvest needs the consent of USD 5.7 mln of METINV’21
noteholders for the terms to be changed, the holding disclosed in its
announcement.

 

The purchase price is 100 percent of nominal for
METINV’21 and 101.25 percent for METINV’23, and the expiration deadline for the
offer is 11:59 p.m. New York City time on Oct. 13.

 

The holders of both METINV’21 and METINV’23 notes will
receive an early tender payment of 3 percent of nominal if they meet the early
tender and consent deadline of 5 p.m. (New York City time) on Sept. 28.

 

The holders of METINV’21 notes will receive the 3
percent of nominal even if they do not tender their notes for purchase,
provided they submit their consent to the change in the notes’ terms by 5 p.m.
(New York City time) on Sept. 28.

 

The closing bid quotes on Sept. 14 were 99.9 percent
of nominal for METINV’21 and 102.7 percent for METINV’23.

 

Metinvest plans to spend no more than USD 290 mln on total
payments to the holders of its notes in the current tender, according to the
announcement.

 

In order to finance the purchase, Metinvest plans to
issue new USD-denominated notes with a minimum amount of USD 300 mln and a
maturity of seven years, according to a Sept. 15 Bloomberg report. Metinvest
said in its announcement it plans to cover all its expenses in connection with
this refinancing exercise, in addition to all its payments to noteholders, with
the proceeds from the issuance of its new notes.

 

The purpose of the Offer is to proactively manage and
extend the holding’s debt maturity profile, lower refinancing risks, and take
advantage of favorable market conditions, Metinvest said in its announcement.

 

Metinvest gives no assurance that the deal will be
completed, the announcement said. The deal’s completion is contingent upon
Metinvest placing its new notes on satisfactory terms, as determined in
Metinvest’s sole discretion.

 

Dmytro Khoroshun: It is possible that the METINV’23
note will be excluded from some of the JPMorgan CEMBI indices as a result
of a successful tender because the amount outstanding of these notes will drop
below USD 500 mln.

 

We expected Metinvest to
refinance its METINV’23 note in 2H20 or in 1Q21 on the wave of strong steel and
iron ore prices and we view this proactive move by the holding as positive.

 

We maintain our neutral view on METINV bonds.