LONDON (ICIS)--Acron's recent roubles (Rb) 6.7bn (€135.4m) sale of a 19.9% stake in a subsidiary involved in a $2bn potash project is "credit positive" as it cuts the risk of having to potentially repurchase investors’ stake before the project starts generating cash flow, rating agency Moody's said on Thursday.
The Russia-based fertilizer producer sold the stake in CJSC Verkhnekamsk Potash Company to ZAO Sberbank Investments on 28 February.
The sale also would bring benefits for Acron in terms of giving the company flexibility on how to time the project’s capital expenditure (capex), which will help it maintain leverage of less than 3:0 during the coming 12-18 months, said Moody’s.
After the sale to ZAO Sberbank, the shareholders at the CJSC Verkhnekamsk project are Acron Group (through JSC Acronit) (51%), Vnesheconombank (20% less 1 share), Sberbank Investments (19.9%) and Eurasian Development Bank (9.1%).
“The recent investment agreement, coupled with the license extension [granted by the Russian Federal Subsoil Resources Management Agency to extend the start-up deadline to 2021], increases the project’s flexibility in terms of capex timing,” said Moody’s.
According to the new plan agreed with the Russian Federal Agency, Acron will increase its investments in the potash project once it completes the construction of an ammonia plant with an annual capacity of 700,000 tonnes.
As a result of the move, Moody’s estimates Acron’s capex will stand at $400m in 2014, resulting in less need for new debt.
The rating agency estimates debt to be at the end of 2014 at $1.4bn, a decrease of $100m compared to 2013. The debt levels result in a leverage ratio of less than 3:0, versus Moody’s previous estimate of leverage ratio at 3:2 at the end of 2013.
(€1 = Rb49.50)