- Steelmaker will apply for a scheme-of-arrangement process
- A group of bondholders are seeking to block debt amendments
Metinvest BV plans to use a U.K. court to help restructure more than $3 billion of debt as it tries to sidestep a group of creditors who have been blocking its proposals.
The Ukrainian steelmaker will start a scheme-of-arrangement process in London to change the terms of about $1.2 billion bonds due in May 2015, November 2017 and February 2018 if it fails to win consent at a creditors meeting on June 26, the company said in a statement on Friday. It’s negotiating a separate agreement with other lenders.
Metinvest, which is controlled by billionaire Rinat Akhmetov, is seeking to restructure debt after shelling and mortar attacks hit almost all of its facilities in eastern Ukraine, hurting production and reducing its access to international capital markets. A group of bondholders who own about 1 percent of the company’s debt are demanding Metinvest pay more than $100 million of bonds that came due last month.
The group of investors, which includes Marathon Asset Management and Noster Capital, abstained from a June 1 vote on a company plan to restructure $114 million in bonds due for repayment in May, thereby scuttling the proposal.
The creditors have written to Metinvest saying they have more than 25 percent of the 2015 bonds, enough to block the proposal again next week at the June 26 meeting, according to the company statement. Metinvest plans to use the London legal system because this may allow it to dilute the influence of the dissenting bondholder group.
The steelmaker said it has enough of a connection to the U.K. to apply to a London court. Its bonds are governed under English law, according to the offering documents. A scheme meeting will be held on July 3, according to the statement.