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PJSC "KOKS" - Consent Offer - Launch

U.S.$350,000,000 5.90 per cent. loan participation notes due 2025 (the "Notes") issued by, but with limited recourse to, IMH Capital D.A.C. (the "Issuer") for the purpose of extending a loan to the Company (the "Loan"), such loan unconditionally and irrevocably guaranteed by JSC Kombinat KMARuda, LLC Tikhova Mine, LLC "Uchastok "Koksovyi" and JSC Tulachermet (Regulation S ISIN: XS2232013263, Common Code: 223201326Rule 144А ISIN: US44970CAA53, CUSIP: 44970C AA5, Rule 144A Common Code: 223126570)


24 MAY 2023


Full announcement available via Euronext


"The Company is soliciting consents of the holders of the Notes (the "Noteholders") to the proposals set out herein (the "Proposals") to be approved by a written resolution of the Noteholders (the "Written Resolution") adopted pursuant to paragraph 8 (Written Resolution and Electronic Consent) of Schedule 6 (Provisions for Meeting of Noteholders) of the Trust Deed dated 23 September 2020 between IMH Capital D.A.C. (the "Issuer") and Citibank, N.A., London Branch, as supplemented by the Deed of Amendment dated 26 October 2022 and the Deed of Amendment dated 19 January 2023 (the "Trust Deed").


Terms defined in the Loan Agreement dated 21 September 2020, as amended by the Deed of Amendment dated 26 October 2022 and the Deed of Amendment dated 19 January 2023 (the "Loan Agreement"), the Trust Deed or the Written Resolution shall have the same meaning herein unless the context requires otherwise.


1. Background


The Loan is unconditionally and irrevocably guaranteed by LLC Tikhova Mine (the "Leaving Guarantor") and other Initial Guarantors under the Deed of Guarantee.


The Company contemplates selling 100% of its participatory interests in the Leaving Guarantor (the "Transaction"). It is envisaged that the Leaving Guarantor's loans owed to the Company, LLC "Uchastok "Koksovyi" and JSC "CPP "Berezovskaya" (together, the "Assigned Intercompany Loans") will be assigned to the prospective purchaser upon completion of the Transaction.


The purchase price for the 100% participatory interests in the Leaving Guarantor and the Assigned Intercompany Loans shall be not less than RUB 22 billion. According to the terms of the Transaction, the purchase price will be paid in cash and cash equivalents denominated in Russian roubles to the Company and the assignors of the Assigned Intercompany Loans. The prospective purchaser is not affiliated with the Company and the Transaction will be concluded on arms-length terms.


The Company anticipates that the Transaction will be completed and the purchase price will be received by September 2023. The Company intends to apply Disposal Proceeds (as defined in the Loan Agreement) from the Transaction towards repayment of Indebtedness at the Company's discretion.


Considering the current market conditions and medium-term prospects of coal and metallurgical industries, the Group decided to strengthen its focus on the development of its own metallurgical raw materials base and fostering its position in innovative metallurgical and green technologies. According to the Company's estimates, the Consolidated Leverage Ratio (as defined in the Loan Agreement), being the key metric of the Group's performance under the Notes, would improve as a result of the Transaction. The management of the Company believes that completion of the Transaction will be beneficial to the Group allowing it to decrease its operating expenses, both fixed and variable, optimize investment activities and investment returns in the current period and further in mid to long-term perspective, increase the Group's competitiveness, and as a result, improve its debt structure, liquidity, financial and economical ratios. Hence, the Company expects that completion of the Transaction would be beneficial for all Noteholders.


In accordance with the terms and conditions of the Transaction the Leaving Guarantor shall cease to be a Guarantor before the Transaction is completed. Pursuant to Clause 9.10 (c) of the Loan Agreement a Guarantee of the Leaving Guarantor will be released automatically without further action provided that the Written Resolution is adopted by the Noteholders. The Leaving Guarantor shall cease to be a Guarantor from the date when the Written Resolution is adopted by the Noteholders.


Therefore, the Company would like to solicit consent of the Noteholders for entering into Transaction and performing of obligations in accordance with Transaction documents and release of the Leaving Guarantor from the Guarantors under the Loan Agreement. For more details please see Section 2 (Proposals sought by way of the Written Resolutions – The Consent) below.


Also, the Company would like to invite the Noteholders to waive any breaches or defaults, which may transpire, directly or indirectly, in connection with the Transaction or release of the Leaving Guarantor. The invitation to waive any breaches or defaults is specified in Section 2 (Proposals sought by way of the Written Resolutions – The waiver) below."


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