Proventus active in the refinancing of Preem

September 5, 2011

For more than a year, Proventus has been in active dialogue with other stakeholders in Preem, the Nordic refinery business. Our firm opinion was that the intrinsic value of the business far exceeded the financial debt of the company, but the currently weak market environment would make it difficult for the parent company Corral to refinance the bonds maturing in September 2011.

After intense negotiations with the owner’s representatives and the senior banks involved, Proventus together with other major bondholders on the bondholders’ committee in August agreed to a solution where the owner would inject USD 600 mn in cash to reduce financial debt.

For the bondholders, the proposed transaction will result in 45% of the nominal amount being repaid in cash, in exchange for bondholders extending maturity on the remaining amount at a higher interest rate than the maturing bonds. At the time of writing this document, 98% of all bondholders have accepted the offer.

Apart from being attractive to the bondholders, the deal is also of highest importance for Preem, as the extension of the Corral financing was a precondition for extending and increasing the bank financing package which includes a substantially higher working capital facility and sufficient resources to complete the investments which Preem faces in the coming three years.

Proventus is satisfied with the outcome for the company and for the bondholders, and believe that the transaction validates our investment strategy, where strong fundamental analysis is coupled with the ability and willingness to be an active partner in dialogue with the companies we invest in, be it through direct loans or, as in this case, through a public bond.