Pro Kapital receives consent in written procedure for callable bonds

Chicago, July 6 – Pro Kapital Grupp AS announced the receipt of consent from bondholders in the written procedure regarding waivers pertaining to some financial covenants and financial reporting undertakings regarding its €28.5 million senior secured callable fixed-rate bonds 2020/2024 (ISIN: SE0013801172), according to a press release.

The required majority of the bondholders voted in the written procedure in favor to approve the waiver.

Accordingly, on July 5, the agent concluded the written procedure under the bonds.

As previously announced, some major bondholders representing around 75.44% of the face amount of bonds had agreed to give some waivers in relation to the bonds.

The notice of the written procedure was available on the company’s website.

The deadline for voting was 11 a.m. ET on July 5.

A quorum of at least 20% of the adjusted outstanding amount was needed.

At least two-thirds of the adjusted amount outstanding was required to vote for the changes to be successful.

As previously reported, if the waiver request was approved by at least a two-thirds majority of the bondholders, the interest rate on the bonds would be increased by 100 basis points from Jan. 1, 2021 until the covenant failure has been cured.

As background, the company temporarily failed to meet its financial covenants of the bonds, and the company has written off receivables from its subsidiary Tallinna Moekombinaat AS as a result of the subsidiary’s bankruptcy proceedings.

Under the terms and conditions of the bonds, the company has to meet a maintenance test at all times that requires the ratio of equity to total assets to be 35%. The company reported that, as a result of a write-off, that ratio dropped to 32% from 50% as of Dec. 31, 2020.

Pro Kapital said it expects to meet the required levels in the second half of the year.

Under the standstill agreement, which resulted from negotiations with the bondholders, the bondholders agreed to waive any right to take actions against the company for the covenant failure and any other potential breach of the company’s obligations under the bonds stemming from the bankruptcy and the write-off event.

Further, the holders agreed on a standstill period that will last until the earlier of Aug. 31, the date on which the waiver is approved by the bondholders in a written procedure or the date the standstill period lapses due to the breach by the company. The waiver to be given in the written procedure will be valid until Dec. 31, 2021.

The bondholders who supported the standstill period agreed not to instruct Nordic Trustee & Agency AB (+46 8 783 79 00) or vote in favor in any written procedure of any proposal to accelerate the bonds related the bankruptcy and write-off event. They agreed to vote in favor of the written procedure and also not to divest the bonds which each of them represents unless the seller ensures that the purchaser agrees to the standstill letter.

Pro Kapital Grupp is a Tallinn, Estonia-based real estate development company with a focus on modern large-scale commercial and residential real estate in the capitals of Estonia, Latvia and Lithuania.

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