Evraz falls as it seeks to make changes to its bond covenants

DEBT-LADEN Russian steelmaker Evraz yesterday asked the holders of a $750m (£428m) bond maturing in 2015 to approve the removal of a covenant, sending its shares tumbling.

“The company is seeking approval by way of an extraordinary resolution of the holders of the notes to remove a covenant requiring the company to maintain the net leverage ratio at or below a specified level,” it said yesterday.

The FTSE 100 steelmaker, part-owned by Chelsea football club owner Roman Abramovich, said it wanted to align the covenants under this issue with those of its other bonds.

Evraz, which earlier this year reported a net debt of $6.07bn as of 30 June, down from $6.44bn at the end of 2011, said in June that it had agreed amendments to its $950m syndicated structured credit facility, which was due to mature in 2015.

Russian steelmakers, who invested heavily in production before the 2008 recession, had to borrow cash to support their operations, after economic slowdown crippled steel markets.

Last month, Evraz posted a three per cent drop in steel production over the third quarter.

Evraz shares closed 7.01 per cent down at 217.4p, as investors reacted negatively to the news.