publity AG (PBY); 2015/2020 convertible bondholders approved changes in the bond’s terms

Published on 19-03-2019 11:17:00
Author Milosz Papst

Today, convertible bondholders agreed to publity’s suggested changes to the bond’s terms. The qualified majority agreed to cancel the bond’s covenant, according to which publity cannot increase its financial liabilities by more than €5m. In return, the bondholders were granted the right to redeem part or all of their bonds plus any accrued interest in case of an increase in liabilities by more than €5m.

The voting took place between Tuesday, 12 March 2019 and Thursday, 14 March 2019. Approximately 58% of the holders of the outstanding bonds cast their votes with around 89% of them approving all the proposed resolutions, exceeding the required qualified majority of 75%.

The convertible bonds were issued in November 2015 with a 3.5% coupon and five-year maturity. They were subject to a dispute between the company and bondholders related to an alleged breach of one of its covenants that imposes a cap on the dividend payout ratio at 50%. Some bonds have already been repurchased by the company and the current amount outstanding equals €46.95m (compared with the original €50m).

Initially, publity proposed to resolve the dispute through an exchange of the convertible bonds for an acquisition right to a new bond with a 7% coupon and a 3.5% mark-up for the first six months of the term of the new bond. The noteholders were not willing to accept the deal back then and some of them requested that publity raises new equity. In response, the company placed 3.78m shares raising €40.46m of gross proceeds in October 2018.

With the right to take up new financial liabilities the company will continue its ongoing review of options for a potential new financing on the debt capital markets, announced on 28 January 2019.

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