25 July 2017
According to Reuters, Ukrainian iron ore pellets producer is to attract pre-export syndicated loan in amount of up to USD 350M.
Tenor of new loan – 4 years. The loan is being arranged by BNP Paribas, which is acting as co-ordinating mandated lead arranger. The deal has been launched to a wider syndication and will close on July 31.
It includes a provision for an accordion feature to increase the deal to up to US$500m depending on bank appetite for the facility.
New loan is supposed to largely improve liquidity position of the company, which is to repay close to USD 200M of debt principal in Y2017 and about USD 320M in Y2018.
As a reminder, we estimate that in H1 2017 EBITDA of Ferrexpo made about USD 260M, expectation for the whole Y2017 – at least USD 400M. If we subtract from this amount planned investments (USD 110M), interest expenses (about USD 50M) and dividends (USD 40M), remaining free cash flow will be close to USD 200M, which will be sufficient to repay debt principal without decrease of cash balance (USD 145M as of 31.12.16.
Situation with debt repayment in Y2018 is more complicated, additional point is new investments (as Ferrexpo mulls over certain expansion of its activity), so new financing seems to be logical step to secure liquidity position of the company under volatile iron ore prices environment.