22 Jan 2010 12:39

Petropavlovsk starts placing $300 mln in convertible 5-yr bonds

MOSCOW. Jan 22 (Interfax) - The gold and lead-mining company Petropavlovsk (formerly Peter Hambro) has begun placing $300 million in convertible five-year bonds, a company statement says.

The securities, issued by wholly owned subsidiary Petropavlovsk 2010 Limited, will be offered to international institutional investors. They may be converted into common Petropavlovsk shares to roughly 7% of company charter capital.

The placement organizer J.P. Morgan Securities Ltd. will be offered an additional option of another $50 million before February 12 in the event of over-subscription. The funds raised by the placement will be used to further Petropavlovsk's general corporate goals.

Expectations are that the bond coupon will be 4% per annum with semi-annual payment. The conversion price will include a premium of 30%-35% of the average share price in the period between the start of placement and pricing. The placement is expected to wrap up by February 18.

The company may over the subsequent two years buy back the bonds in the event that share price is more than 150% over conversion price.

As reported earlier, at the end of last year Petropavlovsk bought back convertible bonds to the tune of $140 million, bonds which had been placed at 7.125% and were to mature before 2010.

The book-runner and leading organizer for the new bond-placement is J.P. Morgan Cazenove. The organizer pool includes Citigroup Global Markets, and co-organizers are Canaccord Adams, ING, Liberum Capital, Raiffeisen Centrobank, SG Corporate Investment Banking, and UniCredit Group.