Economic recovery can't come soon enough for Ineos. After 7 months of negotiation, it has finally agreed new covenants for its €7.3bn of debt with its major lenders. These will now be put to all 230 lenders for approval by 17 July. But the price is high:
• Initially, Ineos was paying c2.5% over euro base rates (Euribor)
• Now this premium is to rise to 6.50% on €5bn of loans
The Financial Times estimates that this will cost Ineos €260m a year, as well as €82m in one-off fees.
And in spite of the agreement, bond markets remain nervous about the company's ability to eventually repay its debt. According to Bloomberg, it now costs €6.16m to insure €10m of Ineos debt against default, plus €0.5m a year. In January 2008, the upfront cost was just €716k, with no annual payment.