Metinvest tenders, seeks consents for $1.2 billion of notes due 2021

By Susanna Moon

Chicago, March 19 – Metinvest BV is tendering for its $1,197,232,103 fixed rate senior secured notes due 2021 until 11 a.m. ET on April 19.

Holders may tender the notes and/or consent to substantially amend the note terms including the interest and optional redemption provisions, covenants and events of default in order to align the conditions, including the removal of the cash sweep provisions, the release of certain guarantors and the common security, some consequential amendments and the issue of new notes, according to a company announcement.

The outstanding amortized amount of the notes is $1,187,123,850.77, which is par and a pool factor of 0.991556982.

The purchase price will be 100.5% of amortized principal amount; the early tender payment will be 3.75% of the amortized principal amount; and the consent fee will be 1% of the amortized principal amount.

The early tender deadline and the electronic consent deadline will be 11 a.m. ET on April 3.

Holders also will receive accrued interest.

Pricing of the company’s new notes is expected to occur on April 4.

Settlement has been set for April 23.

The notes were originally issued as part of the issuer's debt restructuring that was implemented in March 2017.

The issuer said it is making the offer, along with a separate proposal for the amendment of its PXF facility, to proactively manage and extend its debt maturity profile and to take advantage of favorable market conditions to refinance the notes.

Specifically, the issuer is looking to lower its blended cost of funding and to provide for a more stable and longer term capital structure with lower refinancing risk; to release common recourse security that had been part of the restructuring; and to conform the terms to market standards.

The issuer said it plans to issue dollar-denominated fixed rate senior notes with proceeds to be used to fund the tender offer.

The tender is contingent on the issuer securing the needed approval to amend the notes; completion of the PXF facility transaction; and the issue of new notes.

Noteholders who subscribe for new notes in addition to tendering notes in the offer may receive priority in the allocation of the new issue, the company added.

In the consent solicitation, holders must send electronic consents for at least 75% of the outstanding notes by the electronic consent deadline of 11 a.m. ET on April 3.

If the amendments are approved, the terms will be changed as follows:

• Authorization of the issue of the new notes;

• Removal of the security arrangements and the release of the common security, which will result in payments under the notes no longer being secured by the common security;

• Release of the released guarantors from the released guarantees;

• Amendment of the covenants to align them with the terms of the new notes;

• Amendment of the interest provisions to provide for a fixed interest rate and the removal of the provisions for pay-in-kind notes and redemption by installments; and

• Amendment of the events of default.

If the measure is approved, the noteholders will consent to the formula for determining the rate of interest and not the rate of interest itself, the company said.

The fixed rate will result in the yield to maturity for the notes being 50 basis points less than the yield to maturity of the new notes with the stated maturity date five years after the issue date of the new notes.

If the new notes of the nearest maturity have a tenor longer or shorter than five years, the interest rate for the notes will be set so as to result in a yield to maturity of the notes lower than the yield to maturity of the series of new notes by a percentage equal to the difference in maturity between that series of new notes and the notes, expressed in years multiplied by 0.385%, the release noted.

Deutsche Bank AG, London Branch (+44 20 7545 8011), ING Bank NV, London Branch (+31 20 563 8017 or liability.management@ing.com), Natixis (+33 158558098 / +33 158550814 or GSliabilitymanagement@natixis.com) and UniCredit Bank AG (+49 89 378 13722 or corporate.lm@unicredit.de) are the joint dealer managers.

Lucid Issuer Services Ltd. (+44 20 7704 0880 or metinvest@lucid-is.com) is the tender and information agent.

The offer is only being made to holders who are qualified institutional buyers or those who are not U.S. persons under Regulation S.

Metinvest is an integrated mining and steel business based in Donetsk, Ukraine. The company filed for bankruptcy on Jan. 13, 2016 in the U.S. Bankruptcy Court for the District of Delaware under Chapter 15 case number 16-10105.

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