Merkanti Holding plc on Wednesday (today) announced that it has received approval from bondholders to implement a number of changes to an existing bond issue.

Merkanti Holding is the holding and finance company of Merkanti Group, comprised of the activities of Merkanti Bank Ltd, a regulated bank, as well as Merkanti (A) International Ltd and Merkanti (D) International Ltd, two industrial real estate companies in Germany.

The bonds in question were first issued on 18th July 2019 with an outstanding principal amount of €25 million and were set to mature in 2026.

However, last May the company stated that it would be proposing changes to the bond issue with a view to “extend bondholders’ ability to participate in the company” at an interest rate reflective of the current climate, while also maintaining its balance sheet diversification through what Merkanti Holding described as a “fiscally responsible transaction.”

The amendments will see the interest rate of the bonds increased from four per cent to 5.7 per cent, while the maturity date will be extended by a further seven years to 2033.

In the latest market update, Merkanti Holding stated that following a bondholder meeting held on Wednesday morning, the changes were approved.

21,703,000 bonds were represented at the meeting either in person or by proxy, representing 86.8 per cent of the aggregate nominal value of all outstanding bonds.

Holders of 20,452,700 of the outstanding bonds voted in favour of the resolutions, and as a result, the amendments will come into effect on 12th July 2024.

The revised interest rate will start to accrue from 12th August 2024.

The company also stated that bondholders who voted against the resolution can opt to either sell their bonds on the market or avail themselves of a dissenting bondholder offer between 4th July and 11th July 2024.

Through the dissenting bondholder offer, such bondholders can sell their securities for a price of €98.98 per bond, with this being the volume-weighted-average price for the 180 trading days prior to the initial announcement of the amendments.

Merkanti Holding added that as previously announced, bondholders on the company’s register of bonds as at the close of business on 26th July 2024 are entitled to a one-time bonus interest payment of 0.8 per cent of the nominal value of the bonds held.

This will be paid on 12th August 2024 together with accrued interest due – at four per cent – for the immediately preceding interest period.

Trading for the bonds shall be suspended on 8th and 9th August 2024 to ensure that the adjustment in the interest rate does not take place within a trading and settlement cycle that pre-dates 12th August 2024.

“The company wishes to thank bondholders for their consideration of the resolution, attendance at the bondholder meeting, and continuing support of the company,” Merkanti Holding affirmed.