Uralkali agreed to borrow $1 billion for five years from banks led by UniCredit and ING Groep to cut financing costs.
The loan, with a rate of 180 basis points over the London interbank offered rate, will go toward refinancing an earlier Sberbank loan that Silvinit, now a unit of Uralkali, took to fund the development of the Polovodovsky potash deposit. The Sberbank loan was for 45 billion rubles ($1.5 billion) at 8.9 percent including bank fees, according to a company report.
"The interest rate is low as Uralkali probably started to negotiate it some time ago," Troika Dialog analyst Mikhail Stiskin said Friday. "The company has very strong balance, which helped."
With the new loan, Uralkali lowered its average interest rate to about 3 percent, while decreasing currency risks, chief financial officer Viktor Belyakov said in the statement.
Uralkali is using rising potash prices and benefits it expects from the Silvinit acquisition completed in June to cut borrowing costs for the combined company. In August, Uralkali's trading arm increased the potash price for India by 32 percent from a year earlier to $490 a ton. Uralkali raised the price for China twice this year, in January and July. The China price is now at $470 a ton, 34 percent higher than in the same period last year.
A Message from The Moscow Times:
Dear readers,
We are facing unprecedented challenges. Russia's Prosecutor General's Office has designated The Moscow Times as an "undesirable" organization, criminalizing our work and putting our staff at risk of prosecution. This follows our earlier unjust labeling as a "foreign agent."
These actions are direct attempts to silence independent journalism in Russia. The authorities claim our work "discredits the decisions of the Russian leadership." We see things differently: we strive to provide accurate, unbiased reporting on Russia.
We, the journalists of The Moscow Times, refuse to be silenced. But to continue our work, we need your help.
Your support, no matter how small, makes a world of difference. If you can, please support us monthly starting from just $2. It's quick to set up, and every contribution makes a significant impact.
By supporting The Moscow Times, you're defending open, independent journalism in the face of repression. Thank you for standing with us.
Remind me later.