ALROSA might enter debt market in autumn, but likelihood is low
MOSCOW. May 17 (Interfax) - Russian diamond monopoly AK ALROSA might enter the borrowing market later in 2012 only if there are changes in the terms for making payments with Zarubezhneft for 25% in gas assets and Evraz for 51% in the Timir railway project, ALROSA's vice president and CFO, Igor Kulichik, said during a conference call on the company's IFRS (international financial reporting standards) results for 2011.
This could happen in autumn if the timing of the payments change but the likelihood of this scenario is unlikely, Kulichik said. The decision will be made at the start of autumn 2012, he said.
Sources for reducing debt (by the end of 2012, down to 2.7 billion) is the sale of a portion of Zarubezhneft's gas assets and the sale of 51% Evraz's Timir, as well as ALROSA's own funds. "We hope that cash flow will be as strong as it was in 2011," Kulichik said.
ALROSA placed $1.26 billion in eurocommerical papers (ECP) in April for paying for gas assets with VTB . The company's total debt as of May 2012 came to $4.054 billion following the placement. The company should pay off $1.364 billion this year, including $400 million in loan funds and $954 million in several ECP issues, which were placed in April. The remaining $301 million was debt owed to ECP buyers. ALROSA should pay off this amount in 2013.
When asked about the actually of IPO preparations, Kulichik said that there is nothing concrete in this situation and the situation depends on the new Russian government. "All current discussion of ALROSA's IPO is still just discussion," he said. He added: "We are waiting for the formation of a new government and all issues about plans and the form of our possible IPO should be given to the new government. Throughout the last year, we discussed many options with the Ministries of Finance and Economic Development. This might be an IPO, maybe an SPO, or maybe a mixed traction. In any case, we need to wait until June and the formation of the new government."
Commenting on trends on the diamond market, Kulichik said the market's slump, which was witnessed at the end of 2011, has been entirely compensated. Sales in the first and second quarter, in term of prices and volume, came to the earlier planned level.
ALROSA's sales revenue is expected to rise 15 % to $5.074 billion. Sales went up by 26% to $1.2 billion the first quarter, the company earlier said.