Far East inks lock-up deal; eurobonds to be restructured via scheme

By Caroline Salls

Pittsburgh, Sept. 6 – Far East Capital Ltd. SA, part of the Fesco Transportation Group, entered into a lock-up agreement with Fesco plc, as well as the holder of eurobonds repurchased by the group in 2015 and an informal group of noteholders to facilitate the implementation of the company’s restructuring proposal, according to an update released Wednesday.

The informal noteholders group represents about 47% of the company’s outstanding 8% senior secured notes due 2018 and 8¾% senior secured notes due 2020.

Under the proposal presented to the noteholders group from the company, the restructuring of Far East’s eurobond debt would include a one-time cash payment of $547.5 million, net of the total amount of lock-up fees accrued and paid until Sept. 30 and 50% of the lock-up fee accrued and paid for the month of October, in full satisfaction of the group’s obligations under the eurobonds.

The restructuring also gives noteholder group members who sign the lock-up agreement a share of a $2.5 million one-off cash fee.

Any eurobond holders signing the lock-up agreement before Oct. 4 will receive a lock-up fee in the amount of 1.15% of the principal amount held by the relevant bondholder, 0.65% per month beginning with September of the principal amount of the bonds held by each consenting holder until the earlier of the date the lock-up agreement terminates and Oct. 31, for any months following and including November until the month in which the lock-up agreement terminates, 0.70% per month of the principal amount of the eurobonds held by each consenting holder and additional assurances that will take effect when holders of at least 50% of the outstanding eurobonds by value enter into or accede to the lock-up agreement.

The restructuring proposal is subject to the company obtaining financing and/or equity investment in a sufficient amount and a majority of the eurobond holders, representing at least 75% of the outstanding eurobonds by value and a majority in number, supporting the proposal under a U.K. scheme of arrangement.

According to the release, Far East and some of its shareholders participated in detailed discussions with potential investors in connection with a potential indirect substantial minority equity investment in the company and reached in principle an agreement with one investor.

While the amounts and terms of any equity investment and any debt financing remain subject to discussion and possible further adjustment, the company said it currently expects that the combination of funding sources will be sufficient to fund the one-off cash payment.

Far East said its restructuring proposal was accepted and agreed to by the informal noteholders’ group.

Under the lock-up agreement, which runs through at least Oct. 31, the eurobond holders agreed to forbear from taking any enforcement actions on the basis of identified events of default under the eurobonds as well as to take actions to support the restructuring.

If holders of at least 50% of the outstanding eurobonds by value do not accede to the lock-up agreement by 15 business days after Sept. 6, the lock-up agreement will automatically terminate.

Fesco is based in Moscow.

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