Vallourec draft safeguard plan OK’d by financial creditors’ committee, bondholders

By Wendy Van Sickle

Columbus, Ohio, March 29 – Vallourec SA said its financial lenders’ committee and bondholders approved a draft safeguard plan reflecting an agreement in principle announced on Feb. 3.

The plan was approved during meetings on March 29 and convened by the judicial administrator appointed by judgment of the Commercial Court of Nanterre, according to a press release.

The company said the next key milestone is its shareholders’ meeting, which will be held on April 20.

As previously reported, the agreement is between the company and lenders representing 65.1% of the company’s financial debt and certain commercial banks representing 38.8% of the principal amount of the revolving credit facilities. Additionally, the agreement covers investment funds holding the company’s €550 million 6 5/8% senior notes due 2022, the €400 million 6 3/8% senior notes due 2023, the €250 million 4.125% Oceane due 2022, the €500 million 2¼% bonds due 2024 or interests in the revolving credit facility representing 50.5% of the principal amount of that facility and 41.4% of the principal amount of the bonds issued by the company.

The agreement involves a major deleveraging of Vallourec, representing €1.8 billion of debt, more than half the principal amount of the company’s debt.

The deleveraging will be accomplished through a €300 million rights issue for the benefit of Vallourec shareholders, fully backstopped by certain creditors under the revolver and the bonds, proceeds of which will be used to partially repay their claims.

Also, €1.331 billion of the revolver and the bonds will be equitized.

And, a debt write-off will be granted by the commercial banks in the amount of €169 million, combined with a better fortunes instrument.

The company will also refinance the residual debt and secure significant liquidity and operational financing through a revolver of €462 million by the commercial banks, together with new senior notes in the amount of €1.023 billion subscribed by other creditors of the company, by way of set off of claims, over a period of five years.

There will also be a state-guaranteed loan in the amount of €262 million by the commercial banks.

And, there will be bonding lines of €178 million provided by the commercial banks over a five-year horizon.

Separately and also, interest accrued on the revolver and the bonds up to Feb. 1 will be paid in cash on the completion date of the financial restructuring; interest which will accrue from Feb. 2 to June 30 on the revolver and the bonds will be partially reimbursed, partly converted into capital and partly refinanced and included in the above-mentioned amounts.

Vallourec is a Boulogne-Billancourt, France-based provider of industrial products and services.

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