Brunswick Rail Shareholders Propose New Debt Restructuring Plan

A group of shareholders in Brunswick Rail Ltd., the Russian railcar lessor struggling to repay foreign debt following a plunge in the ruble, issued a new restructuring proposal to break an impasse with creditors.

Investors controlling 48 percent of the company suggested reorganizing $600 million of bonds due next year into notes maturing in six and eight years, according to statements published on the company’s website late Friday. The group is also seeking to find a potential buyer for up to 100 percent of the company’s equity and expects to enter into negotiations with the highest bidder on Nov. 28, according to a separate statement.

The shareholders’ restructuring plan would create a senior class of debt due November 2022, according to the statement. Investors will get $375 million of notes in U.S. dollars paying 8 percent interest and can choose to take up to 50 percent in rubles at 11 percent.

The remaining $225 million of debt will be denominated in rubles and extended until November 2024. The notes will pay 3 percent interest with more debt, so-called payment-in-kind, and have the potential for additional cash interest if earnings exceed the company’s business plan, it said.

The company expects earnings to start to recover in 2018, it said in a market update on Monday. Brunswick Rail and creditors have been negotiating terms of a debt restructuring since January after a decline in the value of the ruble increased the cost of repaying debt in foreign currencies.

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