MHP proposes amendments to covenants to its 2020 Eurobond

Ukraine’s leading poultry producer MHP (MHPC LI,
MHPSA) proposed amendments to covenants to its April 2020 Eurobond (USD 76.4 mln
outstanding) and will make a consent payment in amount of a 0.5% principal
amount, according to the company’s Sept. 20 announcement. The amendments will
harmonize the covenants with other two bonds, maturing in 2024 and 2026.

The company offers to make four amendments: removing
the limits to a USD 50 mln credit facility to finance operations with sunflower
seeds and sunflower oil; as well as removing limits on permitted liens that
secure the financing of PP&E construction, improvement and acquisition. The
other two amendments will clarify the terms “Consolidated Total
Assets” and “IFRS.” Also, the company’s announcement pointed
that such changes will “enable to finance all of its crops and products
consistent with its current business model, and proceed with select
acquisitions in line with the company’s strategy”.

Andriy Perederey:  If the company’s bondholders accept the proposed amendments, it
will help the company to be more flexible in using credit facilities in its
construction projects. Also, such changes may hint at the company’s aspiration
to acquire some new assets. So its looks like the company is removing the last
barriers before some deals. It doesn’t change our bullish view on MHP stock and
neutral view on its Eurobonds.