Frigoglass Shareholders Consider Financially Supporting Company to Safeguard Liquidity as Part of Restructuring Deal; Negotiations Ongoing on Potential Deleveraging

Frigoglass shareholders are considering financially supporting the business as part of a restructuring deal that the Greek cooler and glass manufacturer is trying to finalize with its creditors, sources told Reorg. A shareholder investment is one of the options currently being considered among many others, including a potential participation of the bondholders in the investment.

According to sources, parties are currently negotiating on the conditions under which the shareholders may further invest in the company to safeguard its liquidity and on how the bondholders would be treated in this scenario. Other sources pointed out that shareholders’ involvement should not be taken for granted given the importance and weight that Frigoglass represents in their portfolios.

Sources also said that the company is willing to delever its capital structure. Bondholders might accept a potential write-off of the bonds if given equity in exchange. Alternatively, the company might try to pursue a refinancing of its notes.

According to its 2021 annual report, Frigoglass’ significant shareholders include Truad Verwaltungs AG (48.55%), Alpha Bank (5.95%) and Avenue Capital. As a result of the company’s previous restructuring in 2017, Avenue Capital held total voting rights corresponding to 11.7% of shares in the company as of Nov. 23, 2017. Avenue has reduced its position to about 5% as of March 2021.

Truad Verwaltungs is the trustee of a private discretionary trust established for the primary benefit of the present and future members of the late Anastasios George Leventis. It holds 23% stake in Frigoglass’ main customer Coca-Cola Hellenic, or CCH, 23.9% interest in Frigoglass Industries Nigeria and a 50.75% stake in Nigerian power, logistics, and real estate conglomerate A.G. Leventis Nigeria plc.

During the company’s previous restructuring, Frigoglass’ main shareholder contributed €60 million, of which €30 million was new cash and €30 million was delivered through the equitization of a loan.

The group’s shareholders are being advised by Evercore, while creditors are working with Weil Gotshal and DC Advisory. The company has retained Milbank as legal advisor and is working with Peralla Weinberg as financial advisor.

The company’s Romanian manufacturing plant, which was destroyed by a fire in June 2021, is scheduled to ramp up production in early 2023. On July 28, Frigolass reached a definitive agreement with the coinsurance scheme, which had underwritten the insurance coverage in relation to the fire incident in Romania, for an aggregate net compensation amount of €61.6 million related to the property damage (€42 million compensation) and business interruption claims (€19.6 million compensation).

On Aug. 1, Frigoglass made a €8.9 million coupon payment on its €260 million note that matures in 2025, which is quoted at 53-55, according to Solve Advisors.

The company’s cash balance at the end of April was €67 million, as reported. Management said €26 million was outside Nigeria, implying €41 million cash at the Nigerian business. Undrawn lines amounted to €6 million, with €4 million undrawn lines outside Nigeria.

Based on the going concern assumptions in the company’s annual report dated April 11, Frigoglass’ priorities likely include renewing existing credit facilities incurred by Russian subsidiary Frigoglass Eurasia LLC, and “[using] certain of the available cash balances in its Nigerian glass operations,” which involves the ability to transfer cash from Nigeria. Several investors are worried about cash being trapped in Nigeria. However, the company upstreamed cash from Nigeria again in April, management said on Frigoglass’ first-quarter earnings call.

Reorg published a waterfall analysis on Frigoglass. Access the report HERE. Reorg Covenants concluded, in June, that Frigoglass’ had €27 million of super senior debt capacity.

The company's capital structure is below:

--Luca Rossi