The Russian tycoon who landed in July 2017 in the capital of Dia has moved part in the chess game he maintains with the bank. Sources from several of the 12 entities that lend money to the supermarket group explain that this move is intelligent on the part of Mikhail Fridman and open the door to negotiate with him.
The red line imposed by the creditors is that there are no withdrawals. It is true that the entities consulted say that so far there has been no such request. Yes there may be negotiation margin in interest rates and repayment terms, which Letterone defines as an agreement regarding the "capital structure".
The creditors want the loans back, they do not care who controls the company, explain sources familiar with the situation.
The great difficulty is that this agreement is reached, due to the large number of banks that participate in the Dia loans. Among the 12 are Santander, BBVA, Deutsche Bank, ING, Barclays, BNP Paribas, JP Morgan and Société Générale. The refusal of only one of them would ruin, in the first place, Fridman's plan. This is where other actors can play, such as debt funds that agree to purchase that liability. The assumption on the part of the entities that reach the agreement with Fridman of the part of the liabilities of the banks that reject the pact will also be on the table.
July. On the 22nd of that month, 305.7 million euros in bonds matured and yesterday rose to 89% of the nominal value, compared to 75% that closed on Friday. Those that expire in 2021 (300 million euros) and 2023 (another 300 million) increased to 74% and 69%, respectively, from 61% and 59%.
Adjusted deadlines. It is complicated that the solution to amortize the payment, in six months, of the first bonds comes from the money of the capital increase proposed by Fridman. Here financial institutions and their negotiations will be key and also the Letterone fund itself, which can offer the loan to Dia to avoid the non-payment of those bonds.
Goldman Sachs is the advisor to Fridman and also has almost all the ballots to ensure the subsequent expansion committed by 500 million euros. This raises the degree of reliability that the Russian investor deserves to banking.
The average interest of Dia's debt stood at 1.26% in 2017 and, despite the increase derived from the injection of liquidity agreed with the entities on December 31 by up to 896 million euros, now pays less than one two%.
The banks have the liquidity contract until May as a bargaining chip to negotiate with the magnate
The main maturities of Dia's debt, apart from the bonds, begin on May 31st. Then the oxygen ball that the bank granted him moments before the change of year will be exhausted. One of the conditions for Dia of that agreement was "to promote during the first quarter of 2019 a capital increase (…) for a minimum of 600 million." This will be a measure of bank pressure.
Fridman will also have to renegotiate medium and long-term refinancing, which must include a solution also for the owners of the listed debt, whose first maturity will arrive in July. Financial sources point out that the most exposed bank is Santander, so its role will be key in the negotiations with Letterone.
So far, according to banking sources, there has been no specific approach by the Russian investor. "It was expected a maneuver to defend the investment of nearly 800 million that has gotten into the company," says a person familiar with the situation of Dia.