12:07 12.09.2016

Mriya agroholding's creditors agree to reduce debt by 70%

3 min read
Mriya agroholding's creditors agree to reduce debt by 70%

Creditors of Mriya agroholding have given their consent to reduce the company's debt by 70%, to $330 million and after debt restructuring they would receive 50-54% of the share capital.

According to a press release of the agroholding issued on Monday, its debt portfolio restructuring conditions ($1.1 billion) have been approved by coordination committees of creditor banks and Mriya's noteholders.

After the debt restructuring 100% of share capital of Mriya will belong to creditors and managers: 31-35% to providers of working capital for 2016, 7.5% to providers of working capital for 2015, 7.5% to top managers as a motivation package and 50-54% to unsecured creditors.

"I repeated many times that during negotiations on Mriya's debt portfolio restructuring we used the principle of honesty and transparency towards all our creditors and noteholders, and the equality and pari pasu principles towards unsecured creditors," Mriya CFO Ton Huls said.

According to the restructuring conditions, a pair pasu principle applies to all unsecured creditors – equal relation in part of proposed compensation and regarding tools that could be used after restructuring.

After implementing the key restructuring conditions, the total debt of Mriya decreased to the feasible debt budern - $330 million. It will consist of restructured secured loans (no more than $75 million), new working capital ($46 million), payment for providers (no more than $112 million), leasing programs ($5 million) and so-called Loan A – the restored unsecured debt ($93 million).

The balance of existing unsecured loan will be changed into a tool similar to share holdings (Loan B) that would allow unsecured creditors and providers of the working capital to have control over the share capital of Mriya.

The Loan A and Loan B structure is intended to take into account the interests of all creditors, both Ukrainian and international, the company said.

The payments under unsecured loans will consist of:

- payment of Loan A: principal depreciable debt of $93 million or 11% of all nominal unsecured debts of Mriya. The debt will be paid in full before June 30, 2023;

- revenue from medium-term sale of shares at an IPO or to a strategic investor (to be sent to pay Loan B);

- revenue (excluding expenses) after court hearings initiated by liquidator of Mriya Agro Holdind plc that would be distributed proportionally between unsecured creditors.

Mriya's managers said that the total return rate for nominal unsecured loans could reach 25-45% in four or seven years in addition to potential revenue after court hearings.

Mriya is a leading agricultural producer in Ukraine focusing on crop cultivation. Today Mriya had 218,000 hectares of land under management.

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