Metinvest B.V. has announced that a non-binding heads of terms (heads of terms) for the restructuring of its notes and PXF facilities has been agreed upon.
Among other terms, the heads of terms include: an extension of Metinvest’s debt maturities by up to 5.5 years until the end of 2021, including 2.5 years of grace period on scheduled amortization of principal until the end of 2018; a broadening of the security package in favor of the PXF lenders and noteholders, including pledges on shares of some material operating companies; limitations on dividends and other payments to shareholders and tightening of the covenant package; no debt write off.
Once implemented, the heads of terms will provide the Metinvest group with a sustainable debt service profile allowing it to complete a successful turnaround and to operate its business on a stabilized basis going forward.
Commenting on the news, Yuriy Ryzhenkov, the CEO of Metinvest, said: “Agreeing the heads of terms with our creditors is a significant milestone and reflects the constructive dialogue that we have established amongst ourselves and the common willingness to achieve a consensual and comprehensive restructuring that benefits all stakeholders, including customers, suppliers, trade finance providers and employees”.
To allow time to finalize and implement the restructuring, Metinvest, with the support of the Noteholder Committee (representing over 50% of noteholders), issued a practice statement letter for a scheme of arrangement to extend the current moratorium on enforcement action by noteholders. Metinvest has also requested an extension to the contractual standstill arrangements with its PXF lenders.
A scheme of arrangement under English law is a court-sanctioned arrangement by which a company can, amongst other things, implement debt adjustment arrangements with particular groups of creditors without the need to obtain unanimous consent. For the avoidance of doubt, a scheme of arrangement is not an insolvency process and neither Metinvest nor any of its subsidiaries or affiliates has applied for bankruptcy proceedings. All subsidiaries and affiliates of the Metinvest group are expected to carry on their business and operations and meet their obligations as usual, during the moratorium. (Metinvest/Ukrainian metal)