OCI bondholders to receive a premium under tender offer
OCI Global, the chemicals producer controlled by Nassef Sawiris and his family, has agreed to pay back holders of its US$600m 6.7% 2033 notes 110.75% of their principal, plus accrued and unpaid interest, once the planned sale of its methanol business to Methanex completes.
OCI agreed the US$2.05bn sale in October, comprising US$1.15bn in cash, around US$450m of Methanex shares and US$450m of assumed debt and leases. After the deal closes, OCI will have a stake of 13% or so in Methanex. The business has plants in Texas and the Netherlands.
OCI, which is listed on Euronext Amsterdam, said it had reached agreement with a group of the 2033 bondholders, holding 60% of the principal and said it would launch a tender offer for these notes within five days of the methanol sale closing.
The bondholder group said its members would support the offer and tender their notes. As well as getting the premium to par, bondholders said as part of the tender offer they would waive any alleged default or event of default under the bond documentation.
The bonds, which had been changing hands at around par at the start of the year, jumped four points to be bid at 108.30 following the announcement.
“We are delighted to have reached agreement with a large group of our bondholders, with a view to an orderly paydown of our capital structure upon the closing of the MetCo transaction,” said Hassan Badrawi, chief executive of OCI.
“OCI has a long and positive history in the bond markets and values its relationship with its investors, so we are pleased to have structured a deal that allows everyone to participate and rewards bondholders fairly for their faith in OCI over all these years.”
In September, OCI also launched a tender offer at 100% for its US$288.3m 4.625% 2025 and €360m 3.625% 2025 notes.
This is the latest example of investors in investment-grade bonds effectively holding issuers to ransom during a corporate action.
Last month, Swedish industrial bearings maker SKF failed to gain consent from bondholders of its two longest maturing notes to acknowledge that the proposed spinoff of its automotive business on Nasdaq Stockholm would not trigger a cessation of business clause.
SKF asked holders of its four bonds to accept this, via a consent solicitation organised by Citigroup and SEB, but only the holders of the two bonds with the shorter maturities agreed this was the case.
Should SKF now go ahead with the spinoff of its automotive business, it risks the holders of its €300m 0.875% 2029s and €300m 0.25% 2031s accelerating and demanding full repayment of their bonds.
Sawiris, a citizen of Egypt, Belgium and the UAE, is chairman of the company, which used to be called Orascom Construction Industries. He is also executive chairman of Aston Villa Football Club and a member of JP Morgan’s International Council.
SKF had taken a cautious approach, after another Swedish company, Essity, was hit with legal action in December by some of its bondholders seeking full repayment after the healthcare products maker spun off its Asian arm Vinda for SKr19bn (US$1.9bn). Essity had not sought consent from bondholders.