IR.on AG was instrumental in the successful early refinancing of two corporate bonds issued in 2012 in the total amount of EUR 128 million by Ekosem-Agrar GmbH, the German holding company of the Russian Ekoniva Group.
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Cologne, 30 March 2016 - The strategy of extending the maturities of the two bonds by four years each convinced the company’s investors and gives it financial flexibility to complete its current investment programme aimed at expanding Ekosem-Agrar’s market-leading position as the largest milk producer in Europe.
In this project, Ekosem-Agrar took advantage of the possibilities provided by the German Bond Act of 2009, which, however, prescribes a mandatory procedure including a consent by the respective bondholders’ meetings. This called for careful preparation of all investor communication activities in order to ensure that the meetings reached the necessary quorums as well as the three-quarters majority needed for the proposals to pass.
A major challenge for the communication activities was the market environment for SME bonds. The difficult situation at the beginning of the year, not least resulting from the insolvency of German Pellets GmbH, led to the financial media taking a very dim view of the market segment. Another challenge was to advocate the maturity extension strategy developed by IR.on in the public debate and to explain the rationale for the refinancing exercise in a direct dialogue with institutional and private investors from Germany and abroad.
The Ekosem bondholders ultimately accepted the management’s proposal and the bondholders’ meetings on 16 and 17 March 2016 resolved to extend the maturity of the bonds by four years each with the interest rates remaining unchanged.
Although there are some larger anchor investors, the high free float of the two bonds necessitated a broad-based and continuous information policy including regular press releases, interviews, investor mailings and the use of the corporate website as a central communication platform. In this context, the company benefited from its active capital market communication of the past four years, which has resulted in many investor contacts.
The Ekosem bondholders ultimately accepted the management’s proposal and the bondholders’ meetings on 16 and 17 March 2016 resolved to extend the maturity of the bonds by four years each with the interest rates remaining unchanged.
As new bond issues by medium-sized enterprises are difficult to accomplish in the current market environment, the concept should be an interesting refinancing option also for other issuers.
