Metinvest (METINV), Ukraine’s largest steelmaker,
announced on Apr. 4 that the holders of 97% (USD 1,149 mln out of USD 1,187 mln
outstanding) of its METINV’21 Eurobond consented to amending its conditions.
Additionally, Metinvest reported that the amount of USD 1,068 mln (90%) of the
METINV’21 Eurobond was tendered by the early tender deadline of Apr. 3. The
tender offer will expire on Apr. 19 and is subject to conditions, including the
successful issue of new Eurobonds, Metinvest said.
Recall, the portion of the METINV’21 Eurobond not
tendered-in will become a vanilla, bullet-redemption
note with a coupon rate in line with the rate achieved for the new Eurobonds.
In separate news, Bloomberg reported indicative yields
for the new Eurobonds to be around 8% for the five-year METINV’23 Eurobond and
8.5-9.0% for the eight-year METINV’26 Eurobond.
Dmytro Khoroshun: Because the
required minimum threshold for the amendments to be implemented is 75% of notes
outstanding, the restructuring part of the deal proposed by Metinvest on March 19
will be successful.
The share of the METINV’21 Eurobond tendered for
purchase, 90%, indicates that Metinvest offered yields on its new Eurobonds
that were attractive to the markets. Based on the indicative METINV’23 yield
reported by Bloomberg and the formula the noteholders consented to, the rate on
the restructured METINV’21 Eurobond will be 7.5%, provided METINV’23 Eurobond
mature in April 2023. An official announcement on the yields on the new
METINV’23 and METINV’26 Eurobond, as well as the interest rate for the
restructured METINV’21 Eurobond, is expected today, Apr. 4.
We remind our clients that those who met both the
consent and early tender deadlines on Apr. 3 will receive 105.25% of par on the
settlement date (expected Apr. 23). Those who met only the consent deadline but
decide to tender by Apr. 19 will receive 101.5% of par. The noteholders who did
not consent but met the early tender deadline will receive 104.25% of par.
Finally, those who consented but decide not to tender their notes will receive
a 1.0% of par fee.
Regarding the result of the deal for the METINV’21
noteholders, we recall that our fair value estimate was in the range of
104.9-109.1% of par. We need to wait and see how the new METINV’23 and
METINV’26 Eurobonds begin trading in order to make the final judgement. If the
new Eurobonds appreciate early on, this appreciation might be counted toward
the total value recovered from the old METINV’21 Eurobond.
It would be logical for Metinvest to pass part of the
value to the METINV’21 holders by offering the new Eurobonds at attractive
yields, so that they are ready to appreciate immediately after issuance. This
is because the amount Metinvest needs to raise with new notes is expected to be
substantially larger than the amount of old notes outstanding, and the new
notes need to be attractive for the pool of new investors.
Alternatively, if the new notes do not appreciate
immediately, then we are surprised that the METINV’21 holders settled for such
a low value of 105.25%. In this regard, we note that we expected the METINV’23
yield around 8.6%, that is, 60 bps higher than the indicative yield reported by
Bloomberg.
Summarily, the early tender and consent results
speak highly of Metinvest’s ability to reach a deal with the markets.