14/04/2021 - Decoding
Looking forward: Vallourec announces that it has taken a major step in its financial restructuring with the conclusion of an agreement in principle with its main creditors and shareholders. This will enable the Group to rebalance its financial structure by massively reducing its debt and securing the liquidity necessary for it to implement its strategic plan in a volatile market environment. Here’s how it will work...
A complex process, turned upside down by the health crisis
At the start of 2020, Vallourec knew that at the end of the year it would be called on to repay a large part of the debt it incurred during the previous crisis. The profit outlook and positive cash flow resulting from its restored competitiveness and commercial momentum enabled it to prepare for and announce a capital increase with an extension of bank facilities.
The pandemic and resulting economic crisis have undermined these prospects and forced the Group to find an alternative solution. This has now been done, with an agreement in principle that aims for a major debt reduction of €1.8bn – i.e. just over half of Vallourec SA’s gross debt, refinancing of its residual debt over a five-year maturity and the conservation of its available cash (€1.4bn).
“This rebalanced financial structure will allow us to focus on our strategic plan, while our solid liquidity will give us the necessary robustness to overcome the volatility in our markets,” explains Olivier Mallet, member of the Management Board, Chief Financial and Legal Officer.
This rebalanced financial structure will allow us to focus on our strategic plan, while our solid liquidity will give us the necessary robustness to overcome the volatility in our marketsOlivier Mallet
A new shareholder balance
This financial restructuring is accompanied by the arrival of two new investors, Apollo and SVPGlobal, which will become the two largest shareholders. “These two funds have extensive experience in our markets and have already succeeded with similar investment projects in Europe and France. With their significant holdings, they have expressed their confidence in our ability to bounce back,” comments Édouard Guinotte, Chairman of the Group's Management Board.
The historic shareholders, Nippon Steel and BPI, have also demonstrated their support for the restructuring plan by deciding to participate in the capital increase with preferential subscription rights. Their share in the capital will nevertheless be reduced. This plan will be put to a vote at the Group’s next General Meeting on April 20, 2021.
In real terms, this major debt reduction of €1.8bn will be obtained thanks to: