Ukraine's MHP completes buyback of 30% of 2024 Eurobonds at 85% of face value

MOSCOW. Nov 13 (Interfax) - The offer of MHP Group, Ukraine's largest chicken producer, to buy back Eurobonds maturing in May 2024 at a price of 75% of face value did not draw any interest from investors.

The tender offer that MHP announced on September 25 stipulated that the buyback price would be 85% of face value until October 9 and 75% thereafter. However, after the October 9 deadline for the offer to buy back the bonds at 85% of face value, MHP did not received any new applications to buy back these bonds at 75% of face value, despite an almost two-week extension of the initial deadline, Ukrainian media reported, citing a statement the company filed on the Irish Stock Exchange.

The deadline for buyback requests at the reduced price was November 8. On Friday MHP settled up with investors who tendered their bonds. Investors tendered bonds totalling $150.797 million at face value or 30% of the $500 million issue.

MHP said the date of payment for the tender offer coincided with the date of interest payments on the bonds. All the repurchased bonds will be cancelled.

Prices for MHP's 7.75% Eurobonds maturing in 2024 rose from 67.96% to 83.37% of face value on the announcement of the buyback offer and reached 92.7% on October 26, but dropped back to 88.03% on the news of the extension, though they have now recovered to 91.5%, data from the Frankfurt Stock Exchange showed.

MHP said earlier that it had reached a fundamental agreement with a number of international financial institutions and development organizations for up to $400 million in credit resources that it could use to finance part of the tender offer for the bonds. It was reported later that the European Bank for Reconstruction and Development and the International Finance Corporation will each provide $100 million and the U.S. Development Finance Corporation will provide up to $250 million.

The goal of the offer is to solve the problem of the company's debt on the bonds before they mature amid the ongoing conflict in Ukraine and the associated operational and financial risks in Ukraine, MHP said.

MHP said in its report for the first half of 2023 that it had $502 million in cash as of June 30, including $277 million held by group subsidiaries outside of Ukraine. However, under repatriation rules set by the National Bank of Ukraine (NBU), export revenues must be repatriated to Ukraine within six months, which limits MHP's ability to use this money to repay debt, the group said.

The group said Eurobond holders could now take advantage of its current potential liquidity, bolstered by the financing from international financial institutions and development organizations, and reduce exposure to risks associated with Ukraine before the bonds mature given that MHP cannot guarantee that this liquidity will continue and that the bonds will be redeemed on time.

MHP earned a net profit of $67 million in the first half of 2023 compared to a loss of $89 million in the same period of 2022. The group's revenue grew by 35% to $1.555 billion.

In addition to producing chicken, MHP also makes processed meat products, grows grains and produces sunflower oil. MHP's founder, majority shareholder and CEO is Ukrainian businessman Yury Kosyuk.