Los Amodio, Villar Mir and the creditors agree to a comprehensive restructuring of OHL

OHL and its main shareholders and creditors have agreed to a profound restructuring of the company, which will lead to the recapitalization of the group, the refinancing of the debt and the creation of a new company. Nueva OHL will group the main part of the business and back newly issued bonds. The current debt will suffer a reduction, it will be exchanged for the new debt (up to 488 million euros) and in parallel, several shareholders and bondholders will inject up to 71.4 million euros through two capital increases.

The three parts of the operation must be approved in an extraordinary shareholders’ meeting. The operation, although not all the details have been provided, will dilute the participation of the current shareholders and reduce guarantees to creditors who do not join the agreement. OHL shares fell 6% this morning.

The operation has the approval of the Mexicans Amodio (with 16% of the capital), the Villar Mir Group (it has 14.64% via Inmobiliaria Espacio) and the Sand Grove funds (5%), a total of 35 , 64% of the capital. Creditors such as the Beach Point, Marathon, Melqart and Searchlight funds have also agreed on the terms of the operation. In total, the restructuring has the backing of bondholders who have 57% of the company’s two main debt issues, worth 725 million euros.

These issues mature in 2022 (400 million at 4.75% interest) and 2023 (325 million at 5.5%). The debt restructuring will involve the exchange of outstanding debt for new debt, with a three-year extension of maturity and lower interest, but which will be directly backed by the assets of Nueva OHL.

The capital increase will be structured in two tranches, and will be preceded by a capital reduction, in what is known as an accordion operation. The first capital increase will have preferential subscription rights for the current shareholders and will be 35 million euros, with an issue price of 0.36 euros per share compared to the 0.69 euros at which the company is listed. This operation is guaranteed proportionally by the Amodio and the Tyrus fund, which have committed to investing 37 and five million euros, respectively. The part of said investment that they do not contribute in the first extension with rights would be covered in a second operation, also at 0.36 euros, excluding subscription rights. At most, that is, if the extension with rights is covered by current shareholders, both operations will add up to 71.4 million euros, that is, 38% of the current capitalization of the company.

Two alternatives are open for bondholders: either a 12% reduction of the capital by exchanging the old debt for the new one or a combination of debt and cash: from 38.25% of the principal, it will receive 68% of the in new bonds and 30% in the form of new shares at a price of 0.74 euros per share, and the remaining 61.75% will receive the same reduction of 12%. Under both options, bondholders will receive an additional 2% as a premium if they adhere to the restructuring scheme before February 5. Currently the two issues in criculation are trading at 70% of nominal, according to Bloomberg data.

In the event that bond investors overwhelmingly accept the swap option, several creditors have agreed to choose the combination of debt and equity. The new bonds, issued for a maximum of 488.3 million euros, will mature in 2025 and 2026, and will pay an interest of 1.5% until 2023, which will grow to 4.56% after 2023. It is subject to certain settings. This debt will be backed by real guarantees such as pledges on Nueva OHL shares and certain credits and assets of the company. They will not include covenants or restrictions on financial ratios.

The corporate restructuring will consist of OHL contributing “a substantial part of the business and the subsidiaries”, according to the relevant event, to a new company, Nueva OHL, which will develop the business, and which will depend on two companies domiciled in Luxembourg. It is a scheme already applied in the restructuring of other companies with serious financial difficulties, such as Pescanova or Abengoa. In any case, the company has not given more details, and it will be after the rest of the measures adopted. It will also be subject to approval at an extraordinary shareholders’ meeting.

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