Polyus asks holders of dollar Eurobonds to approve option to pay in other currencies, extend grace period
MOSCOW. July 20 (Interfax) - PJSC Polyus , Russia's biggest gold producer, has asked the holders of its dollar-denominated Eurobonds to approve the possibility of making payments on the bonds in alternative currencies such as euros, Swiss francs, British pounds or rubles if the issuer cannot pay in the currency of the bond issue.
Holders of Eurobonds whose rights are recorded in Russian depositories would only get ruble payments.
The company also asked bondholders to vote in favour of extending the grace period within which it can resolve problems with non-payment of principal debt and interest to 30 days.
"Sanctions introduced by western and certain other countries against Russian individuals and entities amid recent geopolitical events and the Russian counter sanctions have significantly disrupted the existing framework and infrastructure for delivery and settlement of securities, including the process of paying the amounts due under the Notes to the Noteholders and formal process of cancelling securities that are purchased by issuers in the market," Polyus said in a statement.
There is a risk that payments of interest or principal made for the benefit of bondholders "may become blocked, frozen or delayed for an uncertain period of time by the Principal Paying Agent, the Clearing Systems or other entities processing those payments," the company said.
Therefore, the company is seeking bondholders' consent to amend the terms of the trust deeds and paying agency agreements to allow direct payments of principal and interest on bonds held at Russian depositories and provide that payments on such bonds will be made in Russian rubles only ("save that the Issuer will retain the discretion to make payments in U.S. dollars to certain Noteholders in its sole discretion") using the official exchange rate of the Central Bank of Russia effective as of the relevant payment date.
The company also proposed to provide that payments on all Eurobonds may be made in an alternative currency, including the euro, sterling, Swiss franc or the Russian ruble (with the Russian ruble being used as the currency of last resort) in the event of the issuer's inability to pay the sums due in U.S. dollars, at an exchange rate specified in the terms and conditions of the bonds.
Polyus is also seeking bondholders' consent to extend the grace period during which a failure to make payments on the bonds on an interest payment date, the maturity date or the repayment date can be remedied without causing an event of default, from five business days (in case of payments of principal) and 10 business days (in case of payments of interest or other amounts) to 30 business days.
"Although the Group expects to make the next interest payment when due, the Group wishes to extend the grace period to avoid a technical Event of Default for a delay in making such payment caused by operational or technical disruptions, as well as legal restrictions that may affect wire transfers and cause instability in the operations of the banking sector," Polyus said.
The deadline for investors to submit their consent is no later than July 27 at 17:00 London time. To enter into effect, the proposals must be approved by investors holding at least 75% of the total number of outstanding Eurobonds of the relevant series.
Polyus currently has three issues of dollar-denominated Eurobonds outstanding - these are bonds securities maturing in 2023, 2024 and 2028. The outstanding Eurobonds total $330 million, $322.6 million, and $700 million, respectively.