Evraz to discuss removal of covenant on syndicated loan with banks - analysts
MOSCOW. Dec 11 (Interfax) - Evraz plc, after agreeing with the holders of $750 million worth of its bonds to remove a covenant envisaging a limit net debt to EBITDA ratio of 3.5, will initiate similar negotiations with banks, since the covenants on its syndicated loan also provide for the same ratio, Sberbank CIB analysts said in a report.
On Monday, Evraz's bond holders approved the removal of a covenant that sets requirements for the debt burden level.
"Noteholders holding 85.16% of the notes participated in the Consent Solicitation with 88.09% of such noteholders voting in favor of the proposal," Evraz said in a statement.
The 2015 Eurobond issue is worth $750 million, and $576.7 million worth of bonds are now in circulation. As compensation for agreeing to the covenant removal, the bond holders should receive $1.9 million.
In July, Evraz amended covenants on $1.4 billion in loans, including a $950 million syndicated loan. In particular, the covenant on the net debt to EBITDA ratio was raised from 3 to 3.5, and the covenant on the EBITDA to interest payout ratio was changed from 3.5 to 3.
At the end of H1 2012, Evraz had net debt totaling $6.07 billion, down 5.8% for the first six months of the year. At the beginning of October, the company announced that it was purchasing a 50% stake in Corber Enterprises Limited, the main shareholder in Russian coal producer OJSC Raspadskaya , for its own shares and $200 million.
Also at the end of H1 2012, Evraz's net debt to EBITDA ratio stood at 2.53. Under the covenants, the threshold is 3.5. Evraz expects that ratio to grow by the end of the year due to a decline in EBITDA, the company's CFO Giacomo Baizini said, adding that if necessary it will agree to change the covenant.
