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LetterOne redoubles the hegemonic power in DIA: absolute owner of stocks and bonds


DAY It is in the process of transforming its business model and also the structure of its liabilities. The distribution company, after passing into the hands of Mikhail Fridman, now see how the Russian tycoon is also one step away from becoming the practically only bondholder, after admit a few months ago the difficulty to issue new debt.

In recent weeks, the Russian investor has launched into the market to buy the bonds of the 'super' company. This week, through the Luxembourg society DEA Finance, communicated to the National Securities Market Commission (CNMV) that it wants to buy all the outstanding bonds maturing in 2023 and of which it already owns 76%.

It is an issue of 300 million euros, with a coupon of 0.875% and that expires in April of that year. It must be remembered that, through this Luxembourg company, Fridman already controls 97.53% of the aggregate principal amount of the bonds issued by DIA with maturity in April 2021. Another 300 million euros but with a coupon, in this case, 1% and where the repurchase by DEA Finance led to the payment of practically the entire issue.


With regard to the bonds that it does not yet have due in 2023, the Luxembourg company proposes that investors pay 60.3% of the nominal amount. That is, for every 1,000 euros, they would receive 603 euros.

In this way, Fridman will not only control more than 75% of DIA's shareholders, but will also be the almost sole actor in the management of the bonds, which leaves all the ability to maneuver in his hands, except in regarding bank debt.

The derivative is that, around the same time as this ad, Standard & Poor's has downgraded DIA's corporate credit rating to 'selective default' (SD), from the previous 'CC' rating. And, the 'rating' of its senior unsecured bonds to 'D' from 'C', with a negative outlook. The reason, precisely, the buyback of bonds in August. "The ultimate controlling shareholder of the offeror is Letterone Holdings. This fact reflects S&P's consideration of the offer on the bonds as 'distressed' as it settled below par value, and the bondholders having accepted a lower amount in relation to to the original payment commitment, given the risk that DIA will not meet its original obligations ".

For now DIA does not value the purchase operation of its debt instruments. In this case, as also happened in the OPA, it is the taxable person. The company only indicates that, when the debt purchase offer ends, it will collaborate with DEA ​​Finance regarding alternatives to address its long-term capital structure which will allow the company to fully focus on running the business and successful execution. of the transformation plan.

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