Uralkali buying up BO-01 bonds at 103% of face value
MOSCOW. Aug 5 (Interfax) - The board of directors at fertilizer-maker OJSC Uralkali has decided in favor of buying back BO-01 series exchange bonds at 103% of face value in an amount up to 30 million of the securities, according to a company statement on the London Stock Exchange.
The buyback is slated for August 22, and could total as much as $1.1 billion. The company has told Interfax the buyback offer is voluntary. Investors have from 11:00 a.m. Moscow time on August 17 to 5:00 p.m. on August 18 to notify the company they are prepared to sell. The buy-back agent is VTB Capital.
"Following the bond buyback the Company will terminate its cross-currency interest rate swap transaction, thereby hedging its ruble bond obligations. The change in the [U.S. dollar] exchange rate means that the company will achieve a positive financial result from the transaction," Uralkali said.
As reported, Uralkali placed these bonds in open subscription on the MICEX Stock Exchange back in February. Of the 50-billion-ruble issue, the company placed 30 billion rubles worth (60% of the issue). The first-coupon rate was determined at 8.25% per annum. No early-buyback offer on the three-year bonds was announced.
"The proceeds of the placement helped Uralkali to secure financing of the acquisition of 20% stake in Silvinit during the merger of the two companies," the company said.
"The aim of the bond buyback is to optimize the capital structure and price of the credit portfolio of the combined Uralkali. Current capital market conditions are favorable for the Company with rising potash sales volumes, a strong pricing policy and increasing production and profitability," company CEO Vladislav Baumgertner is quoted as saying.
The company's board of directors has also decided to establish Uralkali Repairs Ltd ("to carry out repair and maintenance of the mechanical equipment of facilities above and below the ground in Berezniki and Solikamsk"), En Resource Ltd ("in the town of Solikamsk to carry out repair and maintenance of the power equipment of facilities above the ground"), and Center of Automatization and Measurements Ltd ("in Solikamsk to carry out repair and maintenance of the automated equipment of the facilities above the ground"), the statement says.