Polyus Gold seeks to amend $750-mln bond covenants
MOSCOW. May 18 (Interfax) - No. 1 Russian gold miner Polyus Gold is seeking to amend the covenants attached to a $750-million Eurobond issue, the company said in a statement.
The company said it proposes making changes to the terms and conditions of the $750-million, 5.625% notes due 2020 by means of a consent solicitation. The bonds were issued by Polyus Gold International Limited (PGIL), the Jersey-registered holding company for Polyus Gold, and are guaranteed by CJSC Polyus, which is part of the Polyus Gold group. The bonds, issued on April 29, 2013, have been trading on the Irish and London stock exchanges and, since February 2015, on the Moscow Exchange .
Polyus Gold said the issuer was not in breach of any of the existing covenants. The issuer is seeking amendments to the merger and consolidation condition, to provide the flexibility for a potential group restructuring involving a change in the issuer of the notes and/or a change in the parent company of the group; and the condition on the limitation on indebtedness, to amend the group leverage ratio such that it is calculated by reference to the group net indebtedness.
No decisions have been taken with regard to any transaction which would be permitted by the proposed amendments to the existing covenants, the company said.
A note-holders meeting has been scheduled for June 10. Note-holders who agree to change the terms by the early consent deadline of May 29 are eligible for compensation at $7.50 per $1,000 in principal amount of the notes; and those who consent by the expiration date of June 8 are eligible to receive $2.50 per $1,000. In other words, Polyus Gold could spend up to $5.625 million on compensation.
It was reported in April that Polyus Gold was identifying the bondholders. Analysts said at the time that this may be a sign the company wanted to amend the terms of the issue or propose an exchange. It was thought the company might alter some of the covenants attached to the notes or consider some internal reorganization, for example a change of issuer.
Polyus Gold, unlike many other miners, has not bought back bonds in 2014-2015.
Polyus Gold mines hard rock and alluvial deposits in the Krasnoyarsk territory, the Irkutsk, Magadan and Amur regions and in Yakutia. The company increased gold production by 3% to 1.696 million ounces in 2014.
Polyus Gold's largest shareholders are the Suleyman Kerimov Foundation with 40.22%, and companies controlled by Gavriil Yushvayev (19.28%) and Oleg Mkrtchyan (18.5%); the free float is 22%.