Egidaco tries again after bondholders reject original restructuring proposal

By Angela McDaniels

Tacoma, Wash., March 30 - Egidaco Investments plc is soliciting consents from holders of its €70 million 18% bonds due 2011 for a new restructuring proposal after the company's original proposal failed to gain majority approval, according to a company news release.

The new proposal adds a 2% amortization payment to be paid immediately following the receipt of approval and higher minimum equity requirements.

As reported on March 5, Egidaco sent a proposal to the bondholders to amend the conditions of the bonds and to restructure its RUR 1.5 billion facility loan. The bondholders had until March 30 to submit consents.

Under the original proposal, changes to the bond conditions would include introduction of semiannual interest payments and a mandatory amortization condition; lowering the early redemption amount to par; replacing an existing covenant with a revised covenant imposing a minimum group equity equal to $5 million and increasing to $7.5 million on Jan. 1, 2010, $12.5 million on July 1, 2010 and $20 million on Jan. 1, 2011; and introducing an obligation for the company to notify the agent of an event of default within a 30-day cure period.

The amended proposal changes the minimum equity requirement so that it would increase to $7.5 million on July 1, to $10 million on Oct. 1, 2009, to $12.5 million on Jan. 1, 2010, to $15 million on June 30, 2010 and to $20 million on Jan. 1, 2011.

The company said that based on feedback received during "lengthy and detailed" negotiations with the bondholders, its new proposal also gives bondholders the following benefits:

• A reduction in the senior eurobond tranche A to €59.5 million from €70 million and creation of a junior tranche B, which is subordinated and coupon deferred;

• An increase in asset coverage to 226% from 170% as a result of restructuring, rising to 309% at maturity;

• In addition to the original 18% coupon, approximately €15 million in accelerated cash-flows through amortization and more frequent coupon payments; and

• Restoration of the subordination layer.

The consent solicitation will end at 11 a.m. ET on April 16.

The company needs to receive voting instructions from holders of at least one-fifth of the notes' principal amount outstanding, and three-quarters of the votes cast must be in favor of the new proposal in order for it to pass.

Other terms

Under the proposal, the credit facility would be restructured by extending the scheduled repayment date to Sept. 24, 2011, or three months after the redemption date for the bonds, from June 24, 2011; deferring payment of the quarterly coupon payable to the company's subordinated lenders to the rescheduled repayment date; increasing the coupon to 6%; and not allowing any amortization under the facility before the rescheduled repayment date.

A new tranche of bonds would also be created under the proposal, which will be subordinate to the existing bonds. The company said some bondholders agreed to exchange their current €10.5 million of bonds for the same amount of tranche B subordinated bonds at an exchange ratio of 1 to 1.

Payment of the coupon on the new bonds would be deferred to maturity, except for the first coupon paid in lieu of interest on bonds being exchanged for tranche B bonds.

The amended proposal also includes a default waiver that runs through May 11.

Egidaco said it breached a financial covenant on the bonds that fixes the minimum levels for equity and equity plus subordinated debt because of a sharp decline in the ruble rate against the dollar. The covenant is denominated in dollars.

E. Φhman J:or Fondkommission AB (+46 8 402 51 32) is the agent for the consent solicitation.

Egidaco is the Stockholm-based parent company of Tinkoff Credit Systems Bank, a Russian monoline bank specializing in the issuing and servicing of credit cards.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.