Uralkali Decides to Buy Back Bonds
OREANDA-NEWS. August 10, 2011. Uralkali (LSE: URKA), one of the world’s largest potash producers, announces the decisions made by its Board of Directors following its meeting held on 5 August 2011.
Uralkali’s Board of Directors has resolved to buy back its debut BO-01exchange-traded bonds (identification number 4B02-01-00296-A, admitted to trading 12.01.11) amounting to up to 30 million at the price of 103% of the nominal value (up to ca. USD 1.1 billion*). The buyback is set for 22 August 2011.
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 USD exchange rate means that the Company will achieve a positive financial result from the transaction.
The BO-01exchange-traded bonds were placed on the MICEX in February 2011. 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.
Vladislav Baumgernter, Uralkali CEO, commented:
"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 favourable for the Company with rising potash sales volumes, a strong pricing policy and increasing production and profitability".
Uralkali’s Board of Directors has also resolved to establish the following commercial entities:
Uralkali Repairs Ltd to carry out repair and maintenance of the mechanical equipment of facilities above and below the ground in
En Resource Ltd in the town of
Centre of Automatisation and Measurements Ltd in Solikamsk to carry out repair and maintenance of the automated equipment of the facilities above the ground.
These three affiliated companies are part of a programme of restructuring the repair and construction units of the Company and transferring non-production activities to third party providers. The programme will centralize and transfer repair and construction work to the affiliated companies. The restructuring will decrease capital expenditure and operating costs in terms of management expenses; increase time efficiency, improve transparency of the companies’ cost structure, improve the manageability of these companies, and enable their introduction into the market. In future, Uralkali’s affiliated companies will participate in tenders organized by the Company on equal terms with independent contractors.
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