INEOS Group Holdings PLC ("the Group") confirms that the Sounding Group of lenders has agreed to support a package of proposed amendments to the company's financing arrangements, which has now been posted to senior lenders as a consent request.
In January 2009 INEOS announced that a group of lenders (“the Sounding Group”) had been formed in order to consider the company’s financing arrangements and 5-year business plan, as reviewed by PriceWaterhouseCoopers and Chemical Market Associates Inc. INEOS is now pleased to announce that the Sounding Group, advised by Houlihan Lokey Howard & Zukin (Europe) Limited and Deloitte LLP, has unanimously agreed to support a package of amendments to the Group’s financing arrangements, including a reset of the company's financial covenants and a number of concessions and incentives to lenders. These proposed changes constitute the consent request that has now been posted to all senior lenders.
INEOS believes that the proposed package of amendments provides a solid foundation for the Group to address current market conditions and focus on the implementation of its long-term strategy.
Key highlights of the consent request include:
- Reset of the Leverage, Interest Cover and Debt Service Cover covenant levels, effective from September 2009;
- Enhanced lender remuneration comprising a consent fee, increase in interest margin and a EURIBOR floor; and
- A number of other amendments and concessions, including those requested by the Company and by lenders following detailed discussions with the Sounding Group.
Lenders are being asked to vote on the request by 15th July.
John Reece, CFO INEOS said today:
“INEOS is a business that has always planned for bottom-of-the cycle trading conditions; we remain EBITDA positive and cash generative and the business is tracking ahead of plan for the first 5 months of this year. Following completion of this process we will be well positioned to execute on our current strategy.”
Current trading:
The current trading performance of the Group continues to show an improving trend from the lows experienced at the start of the year. Replacement cost (“RC”) EBITDA for April and May 2009 was €65 million and €79 million respectively. Year To Date RC EBITDA for the first 5 months of 2009 was €314 million, which was some 8% ahead of plan. As at 31 May 2009 gross cash balances amounted to € 604 million.
Lazard & Co., Limited is acting as financial advisor to INEOS (Michael Grayer: +44 (0) 20 7187 2000)
ENDS.
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About INEOS
INEOS (www.ineos.com) is the world's third largest chemicals company; a leading manufacturer of petrochemicals, specialty chemicals and oil products. Comprising 17 businesses, with a production network spanning 64 manufacturing facilities in 14 countries, the company produces more than 57 million tonnes of petrochemicals, 20 million tons per annum of crude oil refined products (fuels).
2009 Operating Budget
Following the publication of the Group’s Q1 2009 results on 24th April 2009 (see below) the operating budget for 2009 was delivered to Lenders as expected on 30 April 2009, the highlights of which were as follows:
- Full year revenues of €15.2 billion and full year Replacement Cost EBITDA of €1.1 billion
- Forecast net operating cashflow for the year sufficient to enable the Group to service its expected debt service commitments for the remainder of the year. This would be the case whether or not trading conditions improve beyond current levels.
- The operating budget for 2009 does not assume any major restructurings or divestments take place in the rest of the year.
Q1 2009 summary
- Based on management information Replacement Cost EBITDA for the first quarter was €170 million.
- The Group confirms an improving trend in its trading performance in the first quarter of 2009. Market conditions have shown some signs of slow but steady improvement during the quarter reflected in RC EBITDA for March in the region of €73 million.
- Fixed costs in the Group are line with budget to achieve the planned fixed cost savings of €200 million in 2009. The relevant actions have also taken place to reduce capital expenditure levels to the target of €250 million in 2009.
- INEOS experienced further operating cash inflows in the quarter as the Group has continued to focus on cash management and liquidity. The Group implemented its working capital improvement programme, which has successfully reduced physical inventory levels by 20%. Net debt was approximately €7.5 billion at the end of March 2009.
- Cash balances at the end of the quarter were €560 million. Repayments under the securitisation facility amounted to approximately €210 million in the quarter, and senior bank interest of €210 million was paid in March.
Lazard & Co., Limited
Lazard & Co., Limited is acting for INEOS Group Holdings Plc, INEOS Holdings Limited and INEOS US Intermediate Finance LLC and no one else in connection with the matters referred to in this announcement and will not be responsible to any person other than INEOS Group Holdings Plc, INEOS Holdings Limited and INEOS US.
Forward looking statements
This announcement includes “forNothing as yerward-looking statements”, within the meaning of the U.S. securities laws, based on INEOS Group Holdings plc’s (“IGH”) current expectations and projections about future events. All statements other than reported financial results and statements of historical facts included in this announcement may be deemed to be forward-looking statements, including, but not limited to, estimates of IGH’s EBITDA for 2009 and expected future cost savings. Words such as “believe”, “expect”, “anticipate”, “may”, “intend”, “will”, “should”, “estimate” and similar expressions or the negatives of these expressions are intended to identify forward-looking statements. These forward-looking statements are subject to a number of risks and uncertainties, including: IGH’s high degree of leverage and significant debt service obligations, as well as future cash flow, profitability and liquidity; a continuation of, or further negative developments in, adverse financial market conditions that may affect IGH’s ability to incur or refinance indebtedness and the terms of its existing and future indebtedness; changes in raw material costs and supply arrangements, including rapid fluctuations in the costs of feedstocks; the cyclical and highly competitive nature of IGH’s businesses; adverse developments in global economic conditions; currency fluctuations; disruptions in production at IGH’s facilities, including due to plant and equipment failures, labor stoppages and adverse weather conditions and natural disasters; IGH’s ability to realize synergies and cost savings; and, current or future environmental requirements and the related costs of maintaining compliance and/or addressing liabilities. Reference should be made to IGH’s 2008 annual report, including the section therein titled “Risk Factors”, for a description of certain of these risks and uncertainties. In addition, from time to time IGH or IGH’s representatives, acting in respect of information provided by IGH, have made or may make forward-looking statements orally or in writing and these forward-looking statements may be included in but are not limited to press releases, filings with the regulatory authorities, reports to IGH’s security holders and other communications. Although IGH believes that the expectations reflected in such forward-looking statements are reasonable, IGH can give no assurance that such expectations will prove to be correct. IGH does not undertake any obligations to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.