Deferment for Uralchem

The company arranged for repayment of 333 million dollars to be put off

Today, as banks are reluctant to grant loans and set high interest rates, Uralchem, the agrochemical holding company arranged the repayment of a part of their credit to be put off by 3 years. So, for debt servicing this year the company will need 130 million dollars instead of 463 million. And Uralchem even hopes to reduce this amount too. Experts say that banks made concessions because agrochemical industry was one of the first to show the signs of recovery.

Yesterday, Uralchem announced restructuring of 333 million dollars debt that had been payable in 2009. The company arranged for repayment of the amount to be put off to 2010—2012 by three banks — Sberbank, Raiffeisenbank and UniCredit Bank. According to Anton Vishanenko, Uralchem’s CFO, who is quoted in the Company’s press-release, “after the repayment pattern has changed, the amount payable in 2009 will be US$ 130 million, which is a comfortable and acceptable level for URALCHEM”. The Company’s representative also explained that they’re still holding negotiations with other creditors on further restructuring of the rest of the debt. He said: “We expect that the negotiations will reduce the amount payable in 2009 to less than 100 million dollars”. The company intends to use its own funds to pay the rest of the debt. 

Uralchem does not disclose the terms for restructuring, however on 19 March, Azot, Uralchem’s subsidiary in Berezniki held an extraordinary shareholders’ meeting and discussed a security for the parent company to provide to Sberbank for their debt of 4.8 billion roubles at 18% interest payable by 26 July 2012. The terms of this credit provide for the total of 10 quarterly payments of 500—530 million roubles. Mikhail Sayno at Brokercreditservice believes that these are good terms for Uralchem. Anastasiya Mikharskaya from the Bank of Moscow agreed and added that 18% is a rather low rate for a second-tier company.

According to Uralchem, the company’s total net debt is 1.18 billion dollars, and the bigger part of it is payable in 2010—2012. The figure is rather high; however, experts believe that Uralchem will be able to pay the future debts if the demand for fertilizers is restored. Irina Irtegova from FK Uralsib thinks the fertilizer industry will be one of the first to recover.  The expert said: “Uralchem’s cash flow has considerably reduced since the fourth quarter of 2008, no wonder that the company decided to restructure its short-term debt”. Mikhail Sayno also added that Uralchem’s debt to EBITDA rate in 2008 is likely to be 1.7, which is a good result. In 2009 this rate is expected to reach 4. The expert says: “The debt load is heavy, but the company can bear it, especially as Uralchem’s production seems to be profitable even now. In particular, he specified that today the price for nitrogen fertilizers is some 40% higher then the lowest December prices.