LONDON, May 28 (Reuters) - A minority group of holdout creditors to Ukraine’s steel group Metinvest is unlikely to agree to a consent solicitation that expires on June 1, which could leave the company unable to move forward with the restructuring of its $3 billion of debt, sources close to the situation said.
The minority 2015 group holds $23 million of Metinvest’s $113.8 million 2015 bonds which means they could have the required stake in the notes needed to push through an enforcement on the entire 2015 note issue, which became due on May 20.
An enforcement could mean bankruptcy for the company, while agreeing to the consent solicitation would give Metinvest time to put a more comprehensive restructuring plan in place.
“As far as I understand they are threatening not to vote in favour (of the consent solicitation),” one creditor said.
Under the terms of the consent solicitation, Metinvest is offering to pay holders of its 2015 bonds $28.5 million of the principal on June 20, 2015, with the rest redeemed on January 31, 2016. The group has not revealed its identity or communicated with the company.
Metinvest’s debt includes the $113.7 million 2015 bonds; $289.734 million 2017 bonds; $750 million 2018 bonds; and around $1 billion of secured pre-export loans. Bar the holdouts, all creditors are in agreement to place a standstill over the debt while a debt restructuring plan is agreed.
Metinvest declined to comment.
The consent solicitation is the second to be tabled by the company after the first offer failed to reach the quorum required to vote it through.
According to a second creditor, the company is unlikely to table a third offer, so it is unclear what will happen if the offer is rejected next week.
“It remains to be seen how the company will respond (if the offer is rejected). There aren’t any other contingency plans in place yet,” he said.
The holdout creditors believe that the company has the cash on its balance sheet to offer more to the 2015 bondholders, but that point is disputed by other creditors.
“Metinvest just hasn’t got the money. It might have had it last year but not now,” a third creditor said.
The bondholders also object to the fact that amortising payments have been made to the pre-export loan lenders in last six months.
“They are complaining that the PXF lenders have been paid since November but it is an amortising loan it is contractual payment,” the third creditor said. “They will not succeed in trying to sue PXF lenders over this.”
Under the new consent solicitation, pre-export finance lenders will be treated pari passu to the bondholders and they will also be paid $28.5 million. However, they will only be paid 25 percent of this on June 20, with the rest paid out in installments over the next six months.
Loan lenders to Metinvest include Deutsche Bank, ING, Natixis, Portigon, Unicredit, Erste, BNP Paribas, Bank of Tokyo-Mitsubishi UFJ, Raiffeisen Bank International, Rabobank and Credit Suisse.
Located in the industrial heartland of Donbass, Metinvest, which is majority owned by Ukraine’s richest businessman Rinat Akhmetov, has been left with barely any cash as a result of Ukraine’s economic and political turmoil.
Editing by Christopher Mangham