March 13, 2018 | Cbonds
MHP has announced a new eurobond placement in combination with a tender offer for 2020 notes. According to the relevant press releases, the company has started scheduling meetings with fixed income investors on March 9. The proposed repurchase includes a financing and a minimum participation condition (the latter set at 50% of the outstanding amount), both of which can be waived at MHP’s sole discretion. The early and the standard consideration stand at 109.5% and 106.5% of par, respectively (deadlines are by March 21 and April 6).
Our view: The combined offers are essentially equivalent to a refinancing, which makes sense for MHP given the company’s relatively low leverage (YE18 net debt to EBITDA is expected at 2.1x) and the extensive capex program planned for the mid-term (the Phase II of the Vinnytsia complex, expansion of the land bank to maintain selfsufficiency in grain, M&A targets in the EU). The proposed repurchase conditions look attractive for investors (almost 200bps above the market’s asking price on March 8) and can be partially offset for the issuer via a smaller coupon rate on the new bond (can potentially go down to as low as 5%, in our view). All in all, we believe the probably of the collective transaction going through to be high and recommend participation to current holders (109.5% of par is equivalent to a yield of just 3.7%).
|Status||Country of risk||Redemption (offer)||Volume||Emission Rating (M/S&P/F)|
Company: Mironovsky Khleboproduct
|Full company name||Mironovsky Khleboproduct|
|Country of risk||Ukraine|
|Country of registration||Ukraine|