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FESCO need 547.5 million USD to restructure the debt on Eurobonds

Maritime News September 11, 2017


Russian shipping company FESCO need 547.5 million USD to restructure the debt on Eurobonds within the framework of the agreement reached this week. The company is not yet sure if will issue new debt to finance restructuring or will conclude debt-to-equity deal.

“We will either raise debt-to-equity or will borrow money from finance market. There are two options for debt-to-equity deal – either we have a capital investor in our capital, either financial”, said the President of FESCO Group, Alexander Isurin. In his opinion, the best option is the combination of the entry of a strategist with the attraction of a loan. “This gives the right balance in the structure of capital, in interest payments. It is expensive to attract all loans and can limit development opportunities and capital investments, and we need them, because we are enormously growing by operational indicators compared to last year. I would take it in half for a flat account, 50 to 50, 60 to 40, 40 to 60 – it’s not important”, added he.

Earlier, Fesco agreed on the main conditions for the restructuring of dollar bonds and entered into an agreement to define intentions (Standstill And Lock-Up Agreement) with the bondholders. The terms of the restructuring include a one-time cash payment of 547.5 million USD, subject to certain deductions specified in the agreement.

The agreement on debt restructuring under Eurobonds is valid until the end of October, and its operation can be extended. In addition, the company noted that other holders of these bonds can join this agreement in order to provide restructuring, which the group considers as an optimal and mutually beneficial solution for bondholders.

Earlier, Fesco’s main structure, the Far Eastern Shipping Company (FESCO), postponed the publication of the financial statement for the first half of this year due to ongoing negotiations on the restructuring of the company’s existing financial liabilities.

In circulation there are two issues of Eurobonds for a total of 655 million USD and two issues of ruble bonds for a total of 7 billion rubles. On Eurobonds, Fesco defaulted in May 2016. In 2016, the company offered holders a one-time payment of 50% of the outstanding principal amount for Eurobonds and ruble-denominated bonds, but the holders of the securities then offered a payment of 85%.

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