Pro-Gest 2024 Notes Rise to 65-66 After Obtaining Covenant Test Waiver on Minibonds; Small Blocks Trade

Pro-Gest’s €250 million 2024 senior unsecured notes have risen about 5 points since the start of the week to 65-66 after the Italian paper and packaging group obtained a net leverage covenant waiver on its 2020, 2021, and 2022 bonds, sources told Reorg.

Small blocks of Pro-Gest’s 2024 bonds traded on Feb. 4 at 62 and on Feb. 5 at 65, sources added.

On Feb. 2, Pro-Gest’s Cartiere Villa Lagarina 2020, 2021, and 2022 bondholders waived the net leverage covenant test on Dec. 31, 2019, and amended some of the 2022 bond terms moving forward the maturity of the notes to Dec. 31, 2020, as reported.

In December, Pro-Gest met investors in London to discuss the terms of a possible plan featuring a holdco loan to refinance part of its debt. The amount of the unsecured holdco loan had not been defined but Pro-Gest hinted at close to €200 million. After a lackluster response from investors, the company started working on a new term sheet featuring an instrument ranking pari passu with the existing €250 million 2024 senior unsecured notes.

The next few weeks will be decisive for the company’s prospects to operate its mill in Mantua. The next key date in the authorization procedure is Feb. 18, which is the deadline for members of the public and different administrative bodies to send comments, opinions and technical assessments.

The group’s liquidity materially weakened after it burned €100 million of unlevered free cash in the first nine months of 2019 and net leverage jumped to 6.3x at the end of September 2019 from 3.5x at the end of 2018.

The family-owned paper packaging group has been working with Credit Suisse to assist with “potential capital structure options.” The group is represented by White & Case as its legal advisor.

Reorg’s tear sheet on Pro-Gest is available HERE. The company’s capital structure is below:
 
--Luca Rossi, Cedrick Cassin