Notice of convocation of the remote bondholders’ meeting of UAB "Integre Trans" on 24 January 2024 - Integretrans
December 15th, 2023

Notice of convocation of the remote bondholders’ meeting of UAB “Integre Trans” on 24 January 2024

UAB “Integre Trans” (the Issuer) hereby informs that a remote bondholders’ meeting of the Issuer’s bond issue (ISIN LT0000407553) will be convened on 24 January 2024 (the Meeting). The Meeting will consider to approve the Issuer’s proposed amendments to the Issuer’s financial covenants – Net Debt/EBITDA ratio and Capital ratio established in Section 4.2 of the Company’s information document dated 11 April 2023.

We are kindly asking to get acquainted with the documents attached herein: (i) notice of convocation of the Meeting and (ii) early voting ballot. We encourage all investors to express their position regarding the amendments to the Issuer’s proposed financial covenants by voting in advance or by voting at the Meeting, which will take place on 24 January 2024.

In case of questions regarding this notice or documents attached herein, Meeting and matters to be discussed during it, please contact the Issuer (e-mail address info@integretrans.lt) or the bondholders’ trustee UAB AUDIFINA (e-mail address obligacijos@audifina.lt) any time until the day of the Meeting.

 

The Issuer published the Issuer’s Interim Report for the three quarters 2023 on 24 November 2023 and information on the Issuer’s Business Transformation Plan launched on 11 December 2023.

As announced in the Turnaround Plan, the Issuer’s losses in the three quarters of 2023 are due to the negative macroeconomic developments in the transport sector as well as to the still active growth of the Issuer’s truck fleet that took place at that time. The mismatch between supply and demand in the European transport sector, on the one hand due to the slowdown in regional economic activity, and on the other hand due to the addition to the fleet of trucks planned for 2022, led to a decline in European freight rates for most of 2023. Against the backdrop of declining freight rates, the Issuer’s fleet continued to grow rapidly, with the delivery to manufacturers of trucks ordered by the Issuer as early as 2022, with the size of the fleet peaking in the third quarter of 2023. The excess number of new trucks added to the transport activities led to a deterioration in the efficiency of the fleet, which resulted in a decrease in the Issuer’s gross profitability and a net loss of EUR 5,8 million.

Although the Issuer has already initiated a business transformation plan based on concrete management decisions, focused on eliminating the Issuer’s surplus fleet, optimising working capital and increasing profitability, the Issuer will not be able to achieve its objectives within 2023. The losses incurred in the first three quarters of 2023 led to a breach of the financial covenants applicable to the bonds issued by the Issuer: according to the financial statements for the third quarter of 2023, the Issuer’s Net Debt/EBITDA ratio was 5.66 (maximum covenant limit of 4), and the Capital Ratio was 14.26% (minimum covenant limit of 15%).

In view of the resulting breach of the financial ratios, the Issuer requests the Bond Investors to approve the adjusted limits of the financial commitment ratios for the period of implementation of the Business Transformation Plan:

– Net debt/EBITDA ratio:

  • From 30.09.2023 to 30.06.2024 not greater than 7;
  • From 30.06.2024 to 31.12.2024 not more than 6;
  • From 2024.12.31, not more than 4.

– Capital ratio:

  • From 30.09.2023 to 31.12.2024 not less than 10%;
  • From 31.12.2024 not less than 15%

The setting of such limits will enable the Issuer to implement its business transformation plan while ensuring a consistent return to the original parameters of the credit risk mitigation ratios.

Recognising that a change in the levels of credit risk indicators may be perceived by investors as changing the risk parameters of the bonds, the Issuer proposes to compensate bondholders by paying an additional premium of 1% of the nominal value of the bonds, which would be paid during the term of the changed risk parameters, i.e. in increments of 0.5%, in addition to the interest payments due on 5 May 2024 and 5 November 2024.   Please refer to (i) the notice of the Meeting convened and (ii) the advance voting ballot attached hereto. We encourage all investors to express their position on the changes to the financial covenants proposed by the Issuer by voting in advance or by voting at the Meeting to be held on 24 January 2024.   If you have any questions regarding this Notice and the documents attached hereto, the Meeting and the matters to be considered at the Meeting, please contact the Issuer (e-mail address info@integretrans.lt) or the Bondholders’ Trustee, AUDIFINA UAB (e-mail address obligacijos@audifina.lt), prior to the date of the Meeting.

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