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Metinvest extended maturity of bonds

Ukraine / Business and Finance

Demand for the new issue exceeded the issue amount almost five times, while the total final order amount exceeded $ 1.6 billion

Metinvest extended maturity of bonds

Metinvest, a vertically integrated group of metals and mining companies, has successfully extended the maturity of its Eurobonds, taking advantage of favorable market conditions. As a result of this debt management transaction, the Group's total debt did not change, as all Eurobonds maturing in 2021 and 38% of Eurobonds maturing in 2023 were effectively extended until 2027.

The group carried out two transactions simultaneously:

  • a limited tender offer for the cash repurchase of Eurobonds maturing in 2021 with a coupon rate of 7.50% per annum (“2021 bonds”), of which USD 115,309,027.07 remained outstanding, and Eurobonds maturing in 2023 and coupon rate of 7.75% per annum (“2023 bonds”), of which USD 504,515,000.00 remained outstanding, while obtaining the consent of the 2021 bondholders to include the issuer's call option
  • new issue of US $ 333 million seven-year Eurobonds with a coupon rate of 7.65% per annum and maturing on October 1, 2027

The international financial community has shown significant interest in these transactions. The demand for the new issue was almost five times the amount of the issue, while the total final amount of applications exceeded 1.6 billion US dollars, which significantly reduced the price of the new issue in the process of accepting applications from investors and achieved the final yield of 7.95%. At the same time, 90.3% of bondholders of 2021 and 46.7% of bondholders of 2023 submitted applications for participation in the tender before the end of the early filing deadline.

Yuri Ryzhenkov, CEO of Metinvest Group, said:

“I would like to thank the global investor community - those of you who have been cooperating with the Group for ten years since the placement of their debut Eurobonds in 2010, as well as those who are just getting to know Metinvest - for such significant support. This is clear evidence of investment attractiveness, reliability and trust in the Group. ”

Alexander Lyubarev, Director of Corporate Finance and Treasury of Metinvest Group, said:

“We proactively manage the Group's debt obligations and work systematically to balance the repayment schedule. Our goal is to provide Metinvest with a more stable and long-term capital structure with the lowest refinancing risk. Given the increased volatility in international capital markets since the start of the pandemic, we are pleased with the deal structure we have chosen this time around. It allowed us to achieve the best possible result for the Group. It is important to note that any such transaction requires a team effort, and I would like to thank all the participants for their personal contribution to making this possible. "

Trade details

On September 15, 2020, Metinvest announced its intention to issue new Eurobonds and announced a tender offer to buy back 2021 bonds and 2023 bonds for cash. Bids were capped at $ 320 million, which covered all amounts payable in connection with the tender offer and redemption (excluding accrued interest), provided that the principal outstanding on the 2023 bonds remains above $ 300 million thereafter. transactions. At the same time, Metinvest also began the process of obtaining the consent of the 2021 bondholders to include the issuer's buy option.

After an intensive two-day marketing campaign, on September 17, 2020, Metinvest successfully set the placement price for the seven-year US $ 333 million Eurobond with a yield of 7.95% and a fixed coupon rate of 7.65% per annum. The issue price was 98.429% of the face value. The majority of investors in Eurobonds are investors from the UK (64%), USA (19%) and continental Europe (14%). The distribution of investors by type was as follows: management funds - 90%, banks - 4%, insurance companies and pension funds - 3%, as well as hedge funds and others - 3%. Credit rating agencies Fitch and S&P have assigned a 'BB-' and 'B' rating to the new issue, respectively.

September 28, 2020 at the end of the early tender and obtaining the consent of the 2021 bondholders:

  • holders of 2021 bonds in the amount of USD 104 million (or 90.3%) took part in the tender, all of which were accepted by the Group
  • Holders of 2023 bonds in the amount of USD 235 million (or 46.7%) took part in the tender, of which Metinvest accepted USD 193 million after applying the over-supply ratio
  • the approval process for the 2021 bonds was successful as 92.5% of bondholders gave their
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