Ferroglobe extends consent fee deadline for lock-up agreement

By Sarah Lizee

Olympia, Wash., April 12 – Ferroglobe plc extended the consent fee deadline for holders of its 9 3/8% senior notes due 2022 to sign the company’s lock-up agreement to April 15, according to a press release.

Noteholders may only become eligible for the 1% early cash consent fee, or, to the extent the transaction is implemented using an exchange offer and covenant strip, the 2% early equity fee, by signing the lock-up agreement by the deadline.

As previously reported, the company announced that it reached an agreement in principle on the terms of a financing proposal relating to a $100 million capital raise, consisting of issuances of new debt and equity, and a three-year extension of its 9 3/8% senior notes due 2022.

On March 27, the company entered into a lock-up agreement with members of an informal group of noteholders representing in aggregate about 60% of the 2022 senior notes and Tyrus Capital as backstop provider in respect of a $40 million equity raise forming part of the transaction.

The lock-up effective date under the agreement is March 28.

“By entering into this lock-up agreement, Ferroglobe comes one step closer to completing a comprehensive financing that will de-risk our balance sheet and bolster the overall liquidity of the company,” Javier Lopez Madrid, the executive chairman of Ferroglobe, said in the release.

“With the extension of the senior notes, Ferroglobe will address its near-term debt maturities. Furthermore, through this financing the company will secure sufficient cash to deliver on its strategic plan.”

New equity

Ferroglobe will be deleveraging its balance sheet by raising at least $40 million of equity.

The equity raise is fully backstopped by Tyrus up to $40 million, subject to some conditions, at an issue price of the lower of (i) a 40% discount to the volume weighted average closing price of the ordinary shares over a number of trading days close to the transaction effective date (adjusted to address any unusual trading activity), and (ii) the share price offered in the equity raise by the company, provided that the total number of shares issued (after giving effect to any shares issued in the equity raise) does not exceed the number of shares currently issuable without triggering pre-emption rights and that are not reserved for specific purposes.

New notes

Ferroglobe will issue $60 million 9% senior secured notes that will rank super senior to the extended and amended 2022 senior notes and will mature on June 30, 2025.

The notes will benefit from first ranking security over substantially all of the assets of Ferroglobe and its subsidiaries.

All holders of the 2022 senior notes, on a record date, will have the right to subscribe for new notes.

The new notes will be fully backstopped by the members of the informal group of noteholders.

Amendments to 2022 notes

The 2022 senior notes will be exchanged at par for new $350 million of 9 3/8% senior secured notes that will mature on Dec. 31, 2025.

The reinstated notes will benefit from second ranking security over substantially all of the assets of the group.

The exchange will be implemented using either (i) an exchange offer that will also involve a concurrent solicitation of consents to amend the terms of any 2022 senior notes to eliminate substantially all of the restrictive covenants, certain events of default and other related provisions in the indenture governing the 2022 senior notes or (ii) an English law scheme of arrangement.

Summary of lock-up agreement

The long-stop date of the lock-up agreement is Sept. 28.

Holders of 2022 senior notes that are parties to the lock-up agreement agree to vote in favor of any exchange offer and covenant strip or scheme, as applicable, needed to effect the amendments to the 2022 notes.

Holders of 2022 notes may receive a 0.5% late cash consent fee if they become party to the lock-up agreement and hold notes that became locked-up notes after the consent fee deadline.

If an exchange offer and covenant strip takes place, holders may receive a 2% early equity fee if they hold 2022 notes that became locked-up notes on or before the consent fee deadline, and a 1.75% equity fee if they provides consent and participate in the exchange offer and covenant strip.

If a scheme of arrangement takes place, holders will be entitled to their proportional entitlement of a cash fee to be settled as aggregate 3.75% of the post-transaction ordinary shares in Ferroglobe.

Holders of 2022 senior notes who have not yet signed the lock-up agreement may contact the information agent, Global Loan Agency Services Ltd., at ProjectFox@glas.agency to access further information relating to the transaction and for details of how to accede to the lock-up agreement.

Ferroglobe is a London-based supplier of silicon metal, silicon-based specialty alloys and ferroalloys.

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