May 18, 2017 / 11:28 AM / a year ago

LPC-Russia's SUEK signs US$1bn financing

LONDON, May 18 (Reuters) - Russian coal miner SUEK has signed a US$1bn five-year pre-export financing with a group of 19 international and domestic lenders, the company said in a statement.

The loan, which is secured against SUEK’s export revenues, has an option to increase up to US$1.2bn and will be used for refinancing as well as general corporate purposes.

Deutsche Bank acted as a coordinator on the deal.

“We at SUEK are very pleased with the results of this syndication and how our achievements, plans, and strategy are perceived by our lending banks,” said SUEK’s CFO Nikolay Pilipenko.

The deal closed oversubscribed, attracting around US$1.8bn in commitments — reflecting the growing appetite from international lenders for non sanctioned Russian credits, a bnker close to the deal said.

The use of accordion facilities on Russian loans has also become a defining feature. Loans for Russian metal and mining companies Metalloinvest and Acron, which closed this month, both included accordion features.

Metalloinvest signed a US$1.05bn PXF with an option to draw an additional US$450m, while Acron signed a PXF for up to US$750m.

In March Russian Railways signed a US$420m five-year loan that included an accordion feature allowing it to increase to up to US$1bn.

The use of accordion features allows Russian corporate borrowers to accommodate the increased demand from lenders and also to speed up what can sometimes be sluggish processes from the origination to the final signing of these loans.

“For whatever reasons SUEK took its time [with the deal]. The accordion is just a safety feature to bring in all the banks that are not ready and approved by a certain date,” a second banker said.

The accordion feature on SUEK’s loan also enabled smaller domestic banks to participate in the deal. While the international banks provided the main tranche, the Russian lenders joined the second accordion tranche.

SUEK was last in the market in February 2016 when it signed a US$1bn pre-export financing that comprised a five-year tranche and a seven-year tranche.

That loan was coordinated by ING Bank and Unicredit Bank Austria. (Editing by Chris Mangham)

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