Metinvest offers to buy back part of its senior notes due in 2025 and 2026 worth up to $70 mln

The mining and metallurgical group Metinvest has announced a tender to buy back part of its Senior Notes due in 2025 and 2026 for up to $70 million.

As stated in an exchange report of the holding company Metinvest B.V., the Senior Notes maturing in 2025 will be repurchased at 85-92% of par value, depending on the auction results, the nominal value of the 2026 bonds is undefined and will depend on the auction results.

The bonds are being bought for cash.

The offer is valid from April 29, 2024, and expires at 16:00 London time on May 8 of this year. Senior Notes maturing on June 17, 2025, were issued for EUR 300 million with a coupon of 5.625%, and Senior Notes maturing on April 23, 2026, were issued for $505 million with a coupon of 8.5%.

"The rationale for the offers is to utilise the group's liquidity outside of Ukraine to proactively manage the company's debt burden, smooth cash outflows for debt service, improve the group's overall debt sustainability, as well as to lower liquidity pressures for the upcoming maturities of the 2025 Notes and the 2026 Notes, given the ongoing turbulent operating environment for the Group," the group said in the tender notice.

The ongoing war in Ukraine, coupled with volatile prices on the group's products present unprecedented challenges to the operations of the company and its subsidiaries.

Furthermore, although as at 31 December 2023 the company and its subsidiaries outside Ukraine had sufficient cash balances to meet the company's scheduled interest payment obligations in the near term, there are certain limitations on sending cash upstream to the company from its Ukrainian subsidiaries given the National Bank of Ukraine's current currency control restrictions, and there can be no assurance that these restrictions will be lifted, or waivers from such restrictions will be granted, when required or at all, the document said.

In turn, the offers give Noteholders an option to decrease their exposure to the group in the context of an ongoing war. The group's business remains susceptible to a number of risks which are beyond management’s control and include, among others: increased intensity of Russian assaults on the frontline; escalated strikes on Ukraine's power assets and the resulting disruption to availability of grid power for the group's operations; uncertain sustainability of the Black Sea navigation; deficit of the personnel due to mobilisation in Ukraine; and volatile prices for key products.

These risks could adversely affect the price of the Notes in the future, as stated in the tender rationale.