Ineos gains support of lenders for new terms on its debt

21-Jul-09

British petrochemicals company Ineos has secured support of 96% lenders for new terms on its debt. Ineos Group Ltd. has reached agreement with senior lenders to reset the terms of its €7.5 billion debt pile, bringing an end to one of the largest debt renegotiations of a UK company. The proposals include an easing of its financial covenants and a new business plan. In exchange for giving the company additional breathing space on its loans, lenders will receive a one-off fee and higher interest rates. "The covenant reset provides the necessary headroom and flexibility to progress our current strategy," said Jim Ratcliffe, Ineos founder and chairman. Debt covenants are terms written into lending documents that specify minimum levels of cash and interest coverage and maximum levels of debt and capital expenditure. If a company breaches its covenants, it can constitute a default and lenders can demand their money back. Ineos' new leverage, interest cover and debt service covenant levels will become effective in September.