International rating agencies Standard & Poor’s and Fitch downgraded the credit rating of FESCO Group, due to default on the payment of the corporate bonds series BO-02. Standard & Poor’s downgraded the long-term rating of the group in foreign and local currencies from the previous “CC” to “SD” (selective default). The another major rating agency Fitch, also downgraded the FESCO Group rating from “C” to the level of “RD” (restricted default). The both rating agencies note that downgrade of the company’s rating is due to non-payment of the coupon yield on corporate bonds series BO-02, which was due on May 4 and during the next 30 days period. Standard & Poor’s and Fitch believe that FESCO defaulted on the payment on the bonds.
The company is in negotiations with creditors, including bondholders, as part from the restructuring and optimization program. Earlier FESCO agree to pay 20% coupon to corporate bonds series BO-02, which were due on May 4 and defaulted after 30 days on June 3. However, the bondholders of corporate bonds series BO-02 did not approved the proposal for cancellation of the option for early repayment of the securities. The decision was not legalized due to insufficient number of votes, but more than 70% from the bondholders denied this proposal of FESCO.
FESCO Group proposed to pay the 6th coupon on the bonds series BO-02 and amortization, if bondholders voluntarily give up the right to demand early repayment. If the holders retain the right to demand, the group could refuse to pay the amortization and coupon. Just then the actual default will be declared on the bonds of BO-02 series.
The corporate bonds series BO-02 issue was done in 2013 at total worth of 5 billion rubles. In 2015, the company bought 60% of the issue, so now in circulation are 2 billion rubles in bond maturity securities, which are due on 28 November 2017.