17 January 2017
Metinvest B.V., the parent company of a vertically integrated group of steel and mining companies (the “Company”), is pleased to announce that English Court grants permission to convene meetings of its Noteholders and PXF Lenders in relation to a scheme of arrangement to implement its financial restructuring.
- Metinvest B.V. is seeking to implement a restructuring of its financial indebtedness under its unsecured guaranteed notes (the “Notes”) and pre-export finance facilities (the “PXF Facilities”) contemplated by the non-binding restructuring heads of terms published by the Company on 25 May 2016 (the Restructuring).
- The Restructuring is intended to be implemented via an English scheme of arrangement (the “Restructuring Scheme”). On 17 January 2017 the English court granted leave to the Company to convene scheme meetings of its holders of Notes (the “Noteholders”) and lenders under the PXF Facilities (the “PXF Lenders”) to vote on the Restructuring Scheme which will be held on 6 February 2017.
- Neither the Company nor any of its affiliates has applied for bankruptcy proceedings.
- The Company and its affiliates (including Metinvest U.S., Inc. (“MIUS”), United Coal Company LLC (“UCC”) and their affiliates) will be carrying on their businesses and operations in the usual manner.
- Formal lock-up agreements are in place and the required majorities of Noteholders and PXF Lenders to approve the Restructuring Scheme have already been obtained.
- The scheme meetings will be followed by a further hearing in the English court on or about 8 February 2017 pursuant to which the court will be requested to sanction the Restructuring Scheme. The Company anticipates that the Restructuring will be implemented approximately three weeks following that hearing.
English Scheme of Arrangement and Chapter 15 recognition in the United States
A scheme of arrangement under English law is not an insolvency procedure, but rather a court approved procedure by which a company can propose a compromise and arrangement with particular classes of creditors without the need to obtain unanimous consent. If a scheme is approved by the required majorities of affected creditors and sanctioned by the English court, the scheme will bind all creditors in the relevant class whether or not they approved the scheme.
The Company is the Dutch parent company and the main financing vehicle for the Metinvest group of companies and is able to propose the Restructuring Scheme because, amongst other matters, the terms and conditions of the Notes and the facility agreements in relation to the PXF Facilities are governed by English law. The Company has successfully implemented two previous schemes in relation to temporary moratoriums on enforcement action by the Noteholders which were sanctioned by the English court and implemented on 29 January 2016 and 30 June 2016 respectively (the “Moratorium Schemes”).
On 23 December 2016, the Company issued a practice statement letter proposing the Restructuring Scheme. The Restructuring Scheme does not involve any write-off of Notes or debt under the PXF Facilities and does not purport to affect any creditors, other than the Noteholders and the PXF Lenders, which will form two separate classes of creditors for the purposes of the Restructuring Scheme. The Company and its affiliates (including MIUS, UCC and their affiliates) will be carrying on their businesses and operations in the usual manner.
A convening hearing in connection with the Restructuring Scheme was held in the English court on 17 January 2017 which ordered the convening of separate scheme meetings in which the Noteholders and the PXF Lenders can vote on the Restructuring Scheme. The scheme meetings will be held at the offices of Allen & Overy LLP, One Bishops Square, London E1 6AD on 6 February 2017 commencing from 10.00 am (London time).
On 17 January 2017, an explanatory statement (the “Explanatory Statement”) and certain further documentation in respect of the Restructuring Scheme was made available to the Noteholders and the PXF Lenders. The Explanatory Statement was also published on the Company’s website: www.metinvestholding.com/en/investors/bonds/Restructuring . In connection with the Restructuring Scheme, Listing Particulars in relation to the new notes to be issued pursuant to the Restructuring Scheme have been approved by the Irish Stock Exchange and are included as an appendix to the Explanatory Statement.
A further hearing at which the Company will seek the sanction of the English court of the Restructuring Scheme will take place on or around 8 February 2017. Following the satisfaction of certain conditions precedent, the Company anticipates that the Restructuring Scheme will be implemented on or around three weeks from the date of that hearing.
As at 16 January 2017, Noteholders holding Notes with a principal value of approximately 87% of all outstanding Notes and PXF Lenders holding debt under the PXF Facilities with a principal value of approximately 99% of all debt under the PXF Facilities have agreed to be bound by formal lock-up arrangements pursuant to which they are required to vote in favour of the Restructuring Scheme. The statutory majorities required to approve the Restructuring Scheme at the scheme meetings have therefore already been obtained.
In connection with the Restructuring Scheme and its implementation, the Company is seeking relief in the United States under chapter 15 of the United States Bankruptcy Code to have the Restructuring Scheme recognised and enforced in the United States and to protect the Company’s property in the United States (for example, equity interests in its affiliates based in the United States). Unlike a liquidation or reorganisation case filed under chapters 7 or 11 of the United States Bankruptcy Code, a chapter 15 case is ancillary to a foreign debt adjustment proceeding, and the principal purpose of the chapter 15 case is to obtain recognition of the Restructuring Scheme (which for the avoidance of doubt does not apply to either MIUS, UCC or any of their affiliates). Among other things, chapter 15 cases can give full force and effect in the United States to an order or plan entered or approved in a foreign proceeding, and a number of English schemes of arrangement (including the Moratorium Schemes) have been recognised in the United States through chapter 15. Therefore, the Company’s chapter 15 petition requests that the United States Bankruptcy Court recognises and enforces the Restructuring Scheme in the United States, once approved by the required majorities of Noteholders and PXF Lenders at the scheme meetings and sanctioned by the English court.
Documentation relating to the Restructuring Scheme is available on the following website: www.lucid-is.com/metinvest.
- For editors:
Head of Investor Relations
Tel: +41 22 591 03 74 (Switzerland)
Tel: +380 62 388 16 24 (Ukraine)
Manager of Investor Relations
Tel: +380 62 389 71 36 (Ukraine)
METINVEST GROUP is a vertically integrated group of steel and mining companies that manages every link of the value chain, from mining and processing iron ore and coal to making and selling semi-finished and finished steel products. It comprises steel and mining production facilities located in Ukraine, Europe and the US, as well as a sales network covering all key global markets. The Group is structured into two operating segments, Metallurgical and Mining, and its strategic vision is to become a leading vertically integrated steel producer in Europe, delivering sustainable growth and profitability resilient to business cycles and providing investors with returns above the industry benchmarks. For the nine months ended 30 September 2016, the Group reported revenues of US$4.6 billion and an EBITDA margin of 22%.
METINVEST HOLDING LLC is the management company of Metinvest Group.