26
Wed, Jul
51 New Articles

Clifford Chance, Redcliffe Partners, Baker McKenzie, and A&O Advise on Metinvest Debt Restructuring

Clifford Chance, Redcliffe Partners, Baker McKenzie, and A&O Advise on Metinvest Debt Restructuring

Deals and Cases
Typography

Clifford Chance has advised Deutsche Bank, ING, Natixis, and UniCredit in their capacity as the coordinating committee for the pre-export finance banks in connection with the successful implementation of a USD 2.3 billion debt restructuring for Metinvest. Ukraine's Redcliffe Partners, working alongside Clifford Chance, provided Ukrainian law advice to the committee. Baker McKenzie and Allen & Overy advised Metinvest on the restructuring.

Metinvest is a vertically integrated group of Ukrainian steel and mining companies and one of the largest producers of iron ore raw materials and steel in the CIS.

According to a Metinvest press release, "based on the agreement reached, three series of guaranteed notes – due in 2016, 2017, and 2018 – have been cancelled and delisted and replaced with new listed senior secured notes totaling approximately USD 1.2 billion, due in December 2021 and with new terms and conditions. In addition, four PXF syndicated loan agreements have been amended and restated the terms of which now provide for, among other things, the combining of the four existing PXF facilities into one facility of approximately USD 1.1 billion due in June 2021."

In addition, according to Metinvest, "the terms of Metinvest’s new debt instruments provide for the debt maturities to be extended by five years, including, in respect of the new PXF facility,  two years of grace period on the scheduled amortization of principal. The restructuring provides cash flow flexibility to the Group by imposing a requirement to pay only 30% of accrued interest in cash until the end of 2018. The agreements reached set forth a repayment schedule that allows Metinvest to pursue its production and investment objectives in the next five years, while increasing business profitability."

According to Clifford Chance, "the restructuring ... was undertaken against a backdrop of volatile commodity prices, closed capital markets for Ukrainian issuers, and exceptionally difficult circumstances in the east of Ukraine. Its successful implementation is a remarkable achievement for Metinvest and its stakeholders."

The restructuring was implemented through an English law scheme of arrangement sanctioned by the High Court of Justice of England and Wales. Clifford Chance reports that "the remarkably high level of creditor consent to the restructuring (in excess of 90% by value across the bank debt and notes) is testament to the result achieved by the coordinating committee representing the pre-export finance banks and the ad hoc committee representing the noteholders."

Commenting on the event, Yuriy Ryzhenkov, Chief Executive Officer of Metinvest, said: "The Group had to embark on a debt restructuring due to multi-year low global prices of steel and iron ore products, reduced production volumes amid the conflict in Eastern Ukraine, and its inability to refinance. This deal is unprecedented for the industry and corporate sector of Ukraine. The restructuring negotiations started in early 2015, and we have been in constructive dialogue with all stakeholders throughout this time. The Group has always respected its obligations to creditors, having never demanded a write-off of any part of debt. With creditors’ support, we have arrived at a common solution, cured defaults, deferred repayments for five years and issued new instruments. As such, we have increased our creditors’ confidence and maintained the Group's access to international capital markets. We would also like to thank our legal advisors, Allen & Overy and Baker & McKenzie, our financial advisor, Rothschild, and our information agent, Lucid." 

The Clifford Chance team was led by Partner Alistair McGillivray in London, supported by Partner Adam Fadian from the firm's Moscow office, Partner Jared Grubb from the Istanbul office, and Partner Jelle Hofland and Counsel Ilse van Gasteren from the Amsterdam office. Clifford Chance's London-based Partner Adrian Cohen, Senior Associate Natalie Mills, and Lawyer Tim Lees from the firm's restructuring and insolvency practice led on the scheme of arrangement and advised on the restructuring generally. Other lawyers included Shuyan Tan, Natalia Veryasova, Anna Booth, Charlotte Spierings, Christina Gu, Sasha Kobyasheva and Michael Anderson.

The Redcliffe Partners team was led by Managing Partner Olexiy Soshenko, supported by Associates Olesia Mykhailenko and Evgeniy Vazhynskiy and Junior Associate Oleg Krainsky.

Editor's Note: After this article was published, Baker McKenzie announced that its team had been led by Partner Serhiy Chorny from the Kyiv office and Partners Ian Jack and Roy Pearce from the London office. According to the firm, "key input was provided by Hanna Shtepa, Maksym Hlotov, Stepanyda Badovska, Ganna Smyrnova, Anna Boyko, and Bogdan Dyakovych in Kyiv; Adam Farlow, Maxim Khrapov, Luka Lightfoot, and Chris Hogan in London and Johannesburg; and Robert van Agteren, Valerie van den Berg, and Koen Bos in Amsterdam."

Subsequently, Avellum announced that it had acted as Ukrainian law counsel to the holders of guaranteed notes issued by Metinvest B.V. The firm's team included Partner Glib Bondar, Counsel Igor Lozenko, Senior Associate Taras Dmukhovskyy, and Associates Taras Stadniichuk and Orest Franchuk.