Negotiations between creditors, Dia and its main shareholder – the Letterone fund, controlled by Mikhail Fridman– they start their decisive phase. The 912 million that 12 banks had promised to refinance until March 2023 were conditioned to the capital increase that shareholders rejected yesterday. And, although they reserve the ace to urge the bankruptcy, the bank prioritizes negotiating with the Russian tycoon under the base of the pact signed with the council and closing it, at the latest, April 30, according to sources familiar with the negotiations. As confirmed by these to Five days, in the afternoon of yesterday part of the banks met to analyze the situation.
Letterone he has already put black on white his conditions for the banks. The 500 million increase it has promised to recapitalize the company is linked to obtaining the placings of the banks. Fridman claims a margin of four years, until 2023, to refloat the company. It asks that in this period the debt control ratios be suspended, they are exempted from amortizing debt and interest does not rise.
The refinancing of 912 million to which the company and the bank arrived on Tuesday paves the way for an agreement with Fridman. Although this pact was conditioned to the capital increase defeated at the meeting, it collects many of the claims of the Russian investor. It postpones all maturities to 2023 and urges the company to refinance the 306 million in bonds due next year. It also asks for a minimum EBITDA of 174 million in the next two years and that it transfers part of its stores to a subsidiary that will serve as a guarantee for the creditors.
The main obstacle is the early amortization of part of the credits. The bank asks Dia to repay up to 247 million bank debt with the 100 million that it expects to obtain from the sales of Max Discount and Clarel, to which another 147 million from the capital increase will be added. To this amount it would be necessary to add what the company obtains from the sale of 300 stores that it has ordered to PwC. Letterone, for its part, refuses to use even one euro of the capital increase and divestments for anything other than launching its business plan for Dia.
The last hurdle to be saved is that the Russian investor demands a non-aggression pact (standstill, in the jargon), which cancels the control change clause that included the 896 million liquidity balloon signed on December 31, that prevents the bank from requesting the contest. That liquidity was conditional on the capital increase of the board, but the fact that the banks have not yet requested the tender supposes at least a tacit standstill.
Santander, BBVA, JP Morgan and Barclays lead the negotiations with Fridman and the company on behalf of the 12 bank creditors. An added problem is that the agreement must be approved unanimously and the misgivings of some banks, as well as the internal impediments to negotiate with Russian investors, can complicate the process. The door is open for them to sell this debt to a hedge fund or union banks, albeit at a discount.
Dia shares closed yesterday with a rise of 2.55%, to 0.6354. They remained at 5.4% of the 0.67 euros per share that Letterone offers in its takeover bid. It is far, in any case, from the nearly 4 euros to which it was quoted a year ago. The CNMV has not yet given its approval to the purchase proposal of the Russian investor, and the capital increase, and therefore the negotiations with the banks, are at the expense of the operation triumph. Owners of more than 35.5% of the capital must accept the takeover so that it goes ahead.