Ukrainian iron ore producer Ferrexpo is expected to conclude talks with banks over a 12-month maturity extension on its pre-export finance loans in October, a banker said.
The company is in talks with its bankers over amending these facilities, with discussions centering on certain conditions that the banks want in return, in particular the payment of dividends.
“The major condition being discussed is whether they leave the door open to dividends. This is the sticking point,” the banker said.
The group currently has two outstanding amortizing pre-export financing facilities – a $420 million 2011 facility that matures in July 2016 and a $350 million 2013 facility, which had a start date of August 8 2014 and matures in August 2018.
Ferrexpo has seen its bonds sink in the secondary market over the last week after Ukraine’s Bank Finance and Credit – a related party that held around $174 million of Ferrexpo’s $280 million cash pile – was declared insolvent by the National Bank of Ukraine.
The issuer’s $149 million and $160.72 million 2019 bonds were both down nearly 20% to a cash price of 67.5% from 85.3% on September 18.
The company is also struggling with the fall in oil commodity prices and the conflict in the Ukraine following Russia’s annexation of the east of the country in March last year.
Despite this Ferrexpo is not in financial trouble yet, the banker said, and discussions around maturity extensions are merely pre-emptive measures.
“The bonds are not due until 2019 and the company is still making money. Some of its cash pile has been taken away but it still has over $100 million in cash held outside of Ukraine,” he said. (https://www.reuters.com/article/2015/09/24/ferrexpo-loans-idUSL4N11U4C520150924/Ukrainian metal)