By Ivan Anderzhanov in Moscow
Evraz, the steel group part-owned by billionaire Roman Abramovich, is raising $900m through a $600m convertible bond offering and a $300m issue of global depository receipts as it seeks to refinance its existing debt and finance corporate activity.
The bonds with a maturity in 2014 will carry quarterly coupons of 6.75-7.25% per annum and will be eventually converted into GDRs, according to a company statement.
Lanebrook, the investment vehicle which owns 77.6% of Evraz’s stock, announced that it was prepared to buy out bonds and GDRs for the company’s new shares worth $400m.
According to the company’s management accounts, total debt as of June 30, 2009 amounted to approximately $8.49bn, including approximately $3.79bn of short-term debt and current portion of long-term debt.
In today’s trading statement, Evraz said its is currently in compliance with all its outstanding bonds and credit facilities.
The Russian state development bank VEB approved on June 1 the potential extension of maturity of the $1.8bn in loan facilities granted to Evraz in the fourth quarter of 2008 from one year to two years. Evraz also received a term sheet from VTB confirming ongoing negotiations to extend $321m loan due in October 2009 for another four years.
A research note issued by Italian bank Unicredit said most of the proceeds should go to repaying existing debt.
Unicredit equity analyst George Buzhenitsa added: “..the fact that major existing shareholders are subscribing to the offering indicates their continued belief in the fundamental attractiveness of the company. We are encouraged that blue chip companies are returning to the capital markets to address their financing needs and believe this should be taken as a positive signal for the market as a whole. It should also relieve pressure on heavily leveraged names such as Mechel, Severstal, and TMK.”