Metinvest, a vertically integrated group of mining and metals companies (hereinafter – “Metinvest” or the “Group”), 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 remained unchanged as all Eurobonds maturing in 2021 and 38% of Eurobonds maturing in 2023 were effectively extended until 2027.
The Group carried out two transactions at the same time
- a limited tender offer for the repurchase of Eurobonds maturing in 2021 and a coupon rate of 7.50% per annum (“ bonds 2021 “), of which USD 115,309,027.07 remained outstanding, and Eurobonds maturing in 2023 with a coupon rate of 7.75% per annum (” 2023 bonds “) of which US $ 504,515,000.00 remained outstanding, while obtaining the consent of the 2021 bondholders to include the issuer’s call option
- a new issue of US $ 333 million seven-year Eurobonds with a coupon rate of 7, 65% pa and maturing October 1, 2027
The international financial community has shown significant interest in these transactions. The demand for the new issue was almost five times higher than the amount of the issue, while the total final amount of applications exceeded 1.6 billion US dollars, which made it possible to significantly reduce the price of the new issue during the acceptance of applications from investors and achieve the final yield of 7.95%. At the same time, 90.3% of 2021 bond holders and 46.7% of 2023 bond holders submitted applications for participation in the tender before 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 the debut Eurobonds in 2010, as well as those who those who are just getting acquainted with Metinvest receive significant support. This is clear evidence of investment attractiveness, reliability and trust in the Group. ”
Alexander Lyubareva, Director of Corporate Finance and Treasury of Metinvest Group, noted: “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 get the best result for the Group. It is important to note that any such transaction requires a team effort and I would like to thank all those involved for their personal contributions to making this possible. ”
Details of the agreement
September 15, 2020 Metinvest announced its intention to issue new Eurobonds and announced a tender offer for the repurchase of 2021 bonds and 2023 bonds for cash. Bids were capped at $ 320,000,000, which included all amounts payable in connection with the tender offer and redemption (excluding accrued interest), provided that the principal amount outstanding for the 2023 bonds remains in excess of $ 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 has successfully set the placement price for the seven-year Eurobonds of USD 333 million 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 given the new issue a ‘BB-‘ and ‘B’ rating, respectively.
September 28, 2020 at the end of the early filing deadline and obtaining the consent of the 2021 bondholders
- the 2021 bondholders in the volume of USD 104 million (or 90.3 %), all bids from which were accepted by the Group
- holders of 2023 bonds in the amount of USD 235,000,000 (or 46.7%) took part in the tender, of which Metinvest accepted USD 193 million after applying the over-supply ratio USA
- the 2021 bond approval process was successful not because 92.5% of bondholders agreed to change the redemption terms