Russias largest steel pipe-maker, TMK, on Wednesday announced a tender offer and consent solicitation on its $600m 2011 bonds via VTB Capital and UBS. The company is offering a buy-out at 90% of par if accepted by July 21, and 87% of par if submitted by July 31. Investors will receive a consent fee of three to five cents on the dollar in addition to the buy-out price. The borrower is also looking to amend debt covenants to allow the company to take on more leverage. The issuer is looking to spend $425m on consent fees and accrued coupons after receiving a $425m loan from state-run VTB on Thursday. Russian prime minister Vladimir Putin has urged state banks to provide Rb150bn of new loans this month alone.
The market welcomed the deal. "This is quite an investor-friendly deal as bondholders are receiving total cash consideration of close to 100%, which significantly exceeds the price levels of the bond before the announcement," said Maxim Raskosnov, credit analyst at Renaissance Capital in Moscow. "TMK enjoys a very high degree of support for the refinancing, especially from the largest state controlled banks. VTBs financing of the tender offer is a good example of this support." However, Raskosnov added that if all participate in the buyback, a notional $200m will remain in the market and these notes will be highly illiquid. The results of the buyback will be announced on August 6.
Also on Wednesday, Kazakhstans fourth biggest bank Alliance said it had signed a memorandum of understanding with creditors on restructuring plans for its $4bn of debt. The deal sets out various options. It includes a 22.5% cash payment with a 77.5% debt haircut, limited to $500m, in order to retire a face value $1.85bn of debt. The second option includes extending the maturity profile on some of its debt by seven to 13 years, with a 5.8% coupon and 50% debt haircut. The other option is an exchange for a 10 year note with a 4.7% coupon for the first seven years, with or without a haircut. The final option is to convert debt into preferred shares with a 75%-90% discount but analysts say this option is the least likely outcome of the negotiations. The beleaguered bank is set to submit its plans to the banking regulator on July 15. Kazakhstan has been burnt from large-scale overseas borrowing during the bull run, and now banks face severe asset writedowns and funding shortages.
The countrys largest bank BTA, which owes creditors $15bn, is in the middle of a debt restructuring plan that is expected to be finalised in August. Last week, Goldman Sachs announced it had resigned as an advisor on the restructuring but no reason was given.
Last Friday (July 3), Ukraines biggest property developer XXI Century, announced the results of the restructuring of its 10% $175m 2010 notes with Renassiance Capital acting as the sole advisor. The deal involves an extension of the maturity date from May 2009 until 2014, a reduction of the cash coupon to 9% from 10% and the payment of a consent fee to note holders in shares. This is the first Eurobond restructuring to take place in Ukraine this year. Property prices have collapsed in the country as regional economic activity has fallen off and the local currency has plummeted. A banker on the deal said: "This deal was successful since investors recognise the company faces a cashflow problem but has attractive assets for future development."