Bondholders plan to waive temporary financial covenant

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AS Pro Kapital Grupp (the “Company”) Published an interim report of 1st quarter of 2021, during which it entered into receivables from its subsidiary AS Tallinna Moekombinaat (“TMK”) Following the bankruptcy proceedings of TMK. The Company is therefore in a temporary breach of its financial covenants (the “”Failure of the alliance“” In the context of its senior fixed rate redeemable and redeemable bonds 2020/2024 with ISIN SE0013801172 (theObligations“).

The decision of the Estonian Supreme Court of April 26, 2021 resulted in the closure of the reorganization proceedings of TMK and the opening of bankruptcy proceedings concerning TMK. As a result, a retroactive write-off of the receivables of TMK’s direct parent company, AS Pro Kapital Eesti, in TMK as of December 31, 2020 has taken place, which has led the Company to a situation where it has violated its special commitment. under the terms and conditions of the Bonds (the “Terms and conditions”) Since December 31, 2020. According to the General Conditions, the Company must at all times satisfy a Maintenance Test, namely that the ratio of equity to total assets must be 35% for the group without the indicators. TMK financials. As a result of an adjustment event and a related write-off, the ratio of equity to total assets fell from 50% to 32% as at December 31, 2020. However, failure to comply with the commitment is considered temporary and the Company, according to its estimates, will reach the required levels in the second half of 2021. The Company has entered into negotiations with the bondholders.

The Company today received a standstill letter from a majority of bondholders representing 75.44% of the total nominal amount of the Bonds (the “Major Bondholders”), Stipulating that the Principal Bondholders must:

  • waive any right to take action against the Company for the breach of commitment and / or any other potential breach of the Company’s obligations under the General Conditions due to bankruptcy and / or the delisting event; and
  • agree with the Company on a standstill period which runs until August 31, 2021 at the earliest, the date on which the waiver is approved by the bondholders in a written procedure (the “Written Procedure“) held in accordance with the General Conditions or on the expiry date of the standstill period due to the breach by the Company of the conditions described below (the”Stop Period“), it being understood that the derogation to be given in the written procedure is valid until 31 December 2021.

The Principal Bondholders undertake and undertake during the Standstill Period to:

  • not to ask the Agent (Nordic Trustee & Agency AB (publ)) or vote in favor in any Written Procedure of any proposal, to expedite the Obligations and / or to enforce the security of the transaction under the Terms and Conditions or security documents, as the case may be, due to any potential Event of Default under the Terms and Conditions or any circumstance that could result in an Event of Default under the Terms and Conditions and / or take any other action against the Company, due to bankruptcy and write-off an event;
  • participate and vote in favor of the waiver request in the written procedure; and
  • not assign the Bonds that each of them represents unless the seller of any one of the Bonds ensures that the buyer of these Bonds adheres to the commitments of the standstill letter.

The obligations of the members of the principal bondholders under the standstill letter are separate and not joint.

The above agreements and commitments are subject to the following conditions:

  • the Company acknowledges and accepts the letter of suspension in writing on the date hereof;
  • the Company initiates the Written Procedure relating to the waiver request no later than July 10, 2021 and the notice of such Written Procedure also includes Additional Interest; and
  • the publication of this press release.

If any of the conditions set out above is not met / is violated, and this non-compliance and / or violation has not been corrected within two (2) working days from the time the Agent or Major Bondholders have notified the Company such non-compliance and / or violation of the Standstill Period will automatically and immediately expire.

Subject to the waiver request being approved by the required majority (i.e. 2/3 of the votes) of the bondholders, the Interest payable to bondholders in respect of the Bonds will be increased by one hundred (100.00) basis points per year during the period. beginning on January 1, 2021 and ending when the non-fulfillment of the commitment has been corrected in accordance with (i) a certificate of compliance duly issued by the Company in accordance with the general conditions and (ii) a certificate issued by an auditor ( the “Additional Interest“). The portion of the Additional Interest attributable to the Interest Period ending on the last Interest Payment Date (i.e. February 20, 2021), will be paid on the next applicable Interest Payment Date (i.e. i.e. August 20, 2021).

The Standstill Period may be extended and the standstill letter may be amended if the principal Bondholders and the Company agree in writing.

The Company has accepted the conditions described above and will initiate a written process to have the formal vote in favor of a waiver taken as soon as possible.

Allan Remmelkoor
Member of the Management Board
+372 614 4920
[email protected]



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