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any attributable portion of Zaporizhstal’s result is included. Ilyich Steel reported a 0.3% m/m rise in steel production to 9.2 kt per day, while Azovstal output dropped 19.7% m/m to 9.9 kt per day. The holding's hot iron output decreased 7.2% m/m to 22.1 kt per day in July. During 7M18, Metinvest's steel output was 4.37 mmt, or 3.7% less y/y. Excluding Yenakiyeve Steel, which Metinvest does not control anymore, the holding’s output rose 4.1% y/y in 7M18. “The steel production of 19.1 kt per day in July was above our 17.4 kt per day estimate that considered the 27-day repairs of Azovstal’s oxygen converter No. 2 that started on June 26. Azovstal reportedly had plans to repair its other oxygen converter, No. 1, in August,” Dmytro Khoroshun of Concorde Capital said in a note. “We expect Metinvest's 2018 steel output at about 7.3-7.5 mmt, or 3-5% less y/y.”
Ukraine’s largest pipe producer Interpipe offer creditors a restructuring proposal that includes a 60% haircut at a lender meeting in London on July 17, according to Reorg Research, a distressed debt information provider. Interpipe proposed to exchange $1.25bn of debt and accumulated unpaid interest into three new debt instruments: a six-year $310mn bond with a 9.35% coupon, a $45mn loan for international creditors and a $45mn loan for Ukrainian banks, Reorg Research reported. In addition, international creditors and bondholders will receive EBITDA-linked performance instruments, whereas Ukrainian banks will receive a slightly smaller haircut, according to Reorg Research. After such a restructuring, Interpipe’s leverage would amount to 3.3x using the 2017 EBITDA of $120mn. A substantial fee will be paid upon restructuring, according to Reorg Research. The restructuring plan has wide creditor support and may be implemented via a consent solicitation, Reorg Research said, citing its sources. According to the latest official public Interpipe balance sheet (end of 2012), the company had $1,045mn in debt, of, which $199mn was bonds and $846mn was bank and other loans, adding that the creditors are still awaiting the term sheet for the restructuring. “We estimate that about $110mn in loans were domestic at the end of 2012, and that the nominal haircut would amount to 59% for domestic creditors and 62% for international creditors, including bondholders. We estimate that there is little upside for Interpipe’s currently outstanding bond from the 30/35% of par quotes (as seen on Bloomberg) to the NPV of the deal to bondholders (32-35% of par, assuming a 3% of nominal restructuring fee, 15% discount rate and no flows from the EBITDA-linked instrument). However, further details, especially on the EBITDA-linked value-recovery instrument, are needed in order to estimate the deal’s value to Interpipe’s bondholders,” Dmytro Khoroshun of Concorde Capital said in a note. “So far, Ukrainian companies have not been successful with deals in, which the creditors, including holders of publicly traded instruments, agree to substantial haircuts but the equity holders keep their stakes. If Interpipe pulls such a deal off, it would be a great success for the company,” he added.
Metinvest steel output rose 8% q/q in the second quarter of 2018.
Ukraine’s largest steelmaker Metinvest reported on August 2 an 8% q/q increase in steel production to 1.969 mmt at its subsidiaries in the second quarter of 2018. Azovstal’s output swelled 13% q/q to 1.159 mmt in the second quarter of 2018, while Ilyich Steel’s output inched up 1% q/q to 810 kt, according to the holding’s operational update release on August 2.
Metinvest's the first half of 2018 crude steel output rose 4% y/y to 3.794 mmt on like-to-like basis (for 1H17 Metinvest excluded production at Yenakiyeve Steel, which was halted on February 20, 2017) due to an 8% y/y jump to 1.613 mmt at Ilyich Steel, helped by a 1% y/y increase to 2.181 mmt at Azovstal.
63 UKRAINE Country Report September 2018 www.intellinews.com