Tubos Reunidos reduces its debt by €114m and is making strides in the fulfilment of its strategic plan

 

• Tubos Reunidos has initiated an auction among the financial institutions holding convertible debt in shares, offering to acquire this debt at a discount. This has resulted in a debt reduction of €107m.
• The company has earmarked cash totalling EUR 27.5 million to this transaction.
• In addition, the company has allocated a further EUR 7.5 million to pay off in advance the entirety of the special financing granted due to COVID-19 which is in part ICO-guaranteed.
• The transactions, representing a debt reduction of EUR 114 million when combined, constitute another step forwards in the company's implementation of its strategic plan, which is based on three pillars: the industrial reorganisation of the Group, the implementation of an ambitious investment plan enabling the plants to be more competitive and to adopt new products necessary for the energy transition, and the development of the activity required to ensure solid growth.

Bilbao, 12 January 2024. Tubos Reunidos has initiated an auction among the financial institutions holding convertible debt in shares, offering them the option of buying this debt from them at a discount. This has resulted in a debt reduction of EUR 107 million. The company has earmarked cash totalling EUR 27.5 million to this transaction. In addition, the company has allocated a further EUR 7.5 million in cash to pay off in advance the special financing granted in 2020 due to the COVID-19 pandemic, which was State-guaranteed through ICO (Instituto de Crédito Oficial — Spain's Official Credit Institute).

For Carlos López de las Heras, Managing Director of Tubos Reunidos, "This transaction constitutes another step forwards in terms of the stability of the company and the implementation of its strategic plan. Since last October, the Group's new steel mill has become operational and the company's industrial reorganisation is now virtually complete, significantly boosting its competitiveness. Reducing financial debt is another important step in the company's stability and recovery".

Total debt reduction has been achieved, firstly, by anticipating and repaying in December 2023 all loans granted in the context of COVID-19 and State-guaranteed through ICO amounting to EUR 7.5 million and, subsequently, through carrying out a convertible debt buyback at a discount in January 2024 through the aforementioned competitive auction.

This transaction has been unanimously authorised by all of the Tubos Reunidos financial creditors affected, including financial institutions, bondholders and FASEE (Fondo de Apoyo a la Solvencia de Empresas Estratégicas — Solvency Support Fund for Strategic Companies). This provided solid support for the company and its management team.

For the competitive auction process, the company has earmarked EUR 27.5 million in cash, which has enabled it to reduce its debt by EUR 107 million. The transaction will generate financial income of EUR 65 million, taking into account, in addition to the positive impact considered individually by the discount obtained in the auction, the estimate of the book value of the debt cancelled at amortised cost and of the transaction expenses, which will be reflected in the consolidated annual accounts for the 2024 financial year.

 

TR financing

In 2019, Tubos Reunidos managed to refinance all its debt, also with the unanimous support of the financial institutions, signing a debt refinancing agreement with banks and bondholders in which tranches of convertible debt and convertible bonds were structured for an initial amount of EUR 172 million to which cash resources have been earmarked to initiate the sale of the convertible debt of the financial institutions in a competitive auction.

Furthermore, in 2020 Tubos Reunidos obtained financing of EUR 15 million, partially guaranteed through the State-guaranteed funding managed by ICO, as one of the actions implemented to alleviate the effects of the pandemic, which has now been paid in full on the outstanding principal amount of EUR 7.5 million.

Likewise, in 2021, Tubos Reunidos obtained temporary public support from FASEE, for companies affected by the pandemic, to the tune of EUR 112.8 million.

The total debt reduction achieved by these two transactions amounts to EUR 114 million, with EUR 35 million euros of cash allocated for these purposes, strengthening the balance sheet of Tubos Reunidos for the coming years.

The consultants were Lazard on the financial side and Uría Menéndez on the legal side.

 

About Tubos Reunidos

Tubos Reunidos is a company listed on the Spanish stock exchanges, with more than 130 years of experience. It is a global leader in special niche segments of seamless steel pipe products. The Group has four production units in Amurrio and Subillabide (Álava, Spain), Valle de Trápaga (Bizkaia, Spain) and Texas (USA).