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Concorde Capital Research: Metinvest affiliate Pokrovske agrees to pay USD 73 mln debt in full

October 02, 2018 | Cbonds

The companies comprising Pokrovske Coal assets - in which Metinvest (METINV), Ukraine’s largest steelmaker, owns 24.99% - agreed to pay in full part of their debt owed to Investment Capital Ukraine (ICU), according to two court decisions published on Sept. 27. In detail, the Donetsk regional commercial court approved on Sept. 19 four amicable settlements amounting to USD 43 mln, USD 26 mln, USD 3 mln and USD 1 mln (a total of USD 73 mln) involving CJSC Donetsksteel and OJSC Pokrovske Coal as debtors and ICU as creditor.

Recall, in August Metinvest reported acquiring 24.99% in the Pokrovske Coal group of assets, including OJSC Pokrovske Coal and CJSC Donetsksteel, for USD 190 mln. The remaining 75.01% stake in Pokrovske Coal assets was simultaneously acquired by Metinvest’s co-investors that are likely companies affiliated with Metinvest’s owners, the SCM and SMART groups. In its 1H18 financial statements disclosed in September, Metinvest reported that it has an option to acquire the 75.01% stake in Pokrovske Coal assets from its co-investors, and that the payments for corporate rights in Pokrovske Coal assets might be spread over six years. We estimate that the Pokrovske Coal assets have about USD 1 bln of debt on their balance sheet.

Dmytro Khoroshun: This development increases the probability of Metinvest having eventually to pay not only the entire USD 760 mln for corporate rights in the Pokrovske Coal assets, but also these assets’ debt in full, another USD 1 bln. These payments, if spread over six years, will amount to around USD 300 mln p.a., which is a bearable, but still significant, amount for Metinvest, whose 1H18 EBITDA amounted to USD 1.34 bln, or about USD 220 mln per month.

Company: Metinvest

Full company nameMetinvest B.V.
Country of riskUkraine
Country of registrationNetherlands
IndustryFerrous metals

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