The Acron Group has attracted Russian and international investors to participate in its project to develop the Talitsky area of the Verkhnekamsk potassium and magnesium salts deposits in the Perm region, which is being implemented by Verkhnekamsk Potash Company (VPC). As part of the project VPC will construct and commission the Talitsky mine to provide Acron Group’s facilities with potash for complex mineral fertiliser production, and enable it to enter the supplier market for this raw material.
The project finance structure involves both equity and debt financing. For the first stage, as part of the equity financing, VPC’s share capital has been increased by RUB 16.4 billion (USD 522.5 million), of which RUB 12.8 billion (USD 405.7 million) is provided by third-party investors represented by the State Corporation ‘Bank for Development and Foreign Economic Affairs (Vnesheconombank)’, Eurasian Development Bank and Raiffeisenbank. The private placement of additionally issued shares among interested investors has been completed.
Based on the additional share issue report and the registration of changes in VPC’s constituent documents, the Acron Group and other investors currently own the following stakes in the company’s authorised capital:
The raised funds will be used to finance the construction of the Talitsky mine, primarily to perform shaft boring, which is the most important stage of the potash project. The total amount of capital expenditures required for the project is estimated to be USD 2 billion, excluding the cost of the mining licence for the Talitsky area, which was about USD 700 million. At this stage the external investments will allow full-scale construction of the Talitsky mine to start as early as Q4 2012.
Debt financing by Vnesheconombank in the form of a USD 1.1 billion credit line facility, on terms agreed upon by the parties, is planned in order to further develop the project in 2014.
Chairman of Acron’s Board of Directors Alexander Popov commented on the results of the deal:
«The development of the Talitsky area of the Verkhnekamsk potassium-magnesium salts deposit is a key factor for demonopolisation of this industry and will allow the Acron Group to implement in full its strategy to convert itself into a vertically-integrated holding.
It is obvious that implementing any greenfield project in the mining industry entails risk. However, the Acron Group has already been successful with several large-scale investment projects, including raw material projects, and has proved its responsible approach and commitment, as well as its ability to meet deadlines and stay within budget. The government’s estimation of the project’s importance and potential and its confidence in our company have helped us attract important financial investors in the form of VPC shareholders.
We have now attracted sufficient financing for the full-scale construction of the Talitsky mine. We intend to use the Vnesheconombank credit line facility in the future which guarantees further financing of the project. We are confident in our ability to launch the new potash production facility at the Talitsky area in 2016 and that our investors will benefit from the growth of the company’s value.»
Deputy Chairman of Vnesheconombank Anatoly Ballo said:
«The project to develop the Verkhnekamsk potassium-magnesium salts deposit is the first time that Vnesheconombank and Acron Group have worked together and is the bank’s largest project in the Privolzhsky Federal District.
At the moment, we are satisfied with the results of our cooperation and we are looking forward to enhancing it in the future and realising the full potential of Vnesheconombank as a development bank.»
Chairman of the Board of ZAO Raiffeisenbank Sergey Monin commented on the deal:
«The participation of our bank in this long-term project demonstrates how Raiffeisenbank is committed to the Russian market as a whole, and belief that the Russian economy will continue to grow and develop.
I would like to note that this deal is unique for the Russian market, taking into account that the financing was attracted at the earliest initial stage of the project. Not only do we consider this sector to be greatly promising and investment-attractive both on the Russian and the international markets, but we also highly rate the experience and expertise of Acron’s management and shareholders, and we are confident in their ability to successfully implement this project.»
«The direct participation of the Eurasian Development Bank in the capital of the company set up to implement the project of the Acron Group amounts to approximately USD 100 million», noted the Deputy Chairman of the EDB Executive Board Dmitry Zhurba. «This is the first EDB project in which we have direct participation in the capital of a real sector company. The EDB participation in the capital as an international development bank is due to the significant influence that this large-scale project has on achieving sustainable growth in economy of the Russian Federation, on developing export-oriented production in Russia and on expanding competition on the potash fertiliser market and its demonopolisation. Furthermore, the project will have innovative and social effects. The former will involve the introduction of modern technologies and the installation of high-efficiency equipment on the production facility which will allow the integrated and efficient utilisation of recoverable resources. The latter effect relates to the creation of a large number of jobs, regional development and an increase in tax revenues.»
ZAO Raiffeisenbank is a subsidiary of Raiffeisen Bank International AG. Raiffeisenbank ranks 9th among the Russian banks in terms of assets, based on H1 2012 results (Interfax-CEA). According to the same Interfax-CEA data, ZAO Raiffeisenbank ranked 5th in terms of liabilities of individuals and 10th with regard to consumer lending.
Raiffeisen Bank International AG (RBI) regards both Austria, where it is a leading corporate and investment bank, and Central and Eastern Europe (CEE) as its home market. In CEE, RBI operates an extensive network of subsidiary banks, leasing companies and a range of other specialised financial service providers in 17 markets. RBI is the only Austrian bank with a presence in both the world’s financial centres and in Asia, the group’s further geographical area of focus. In total, around 61,300 employees service about 14.6 million customers through around 3,100 business outlets, the great majority of which are located in CEE (these figures include Polbank). Raiffeisen Bank International is a fully-consolidated subsidiary of Raiffeisen Zentralbank Oesterreich AG (RZB). RZB indirectly owns around 78.5 per cent of the common stock, the remainder is in free float. RBI’s shares are listed on the Vienna Stock Exchange. RZB is the central institution of the Austrian Raiffeisen Banking Group, the country’s largest banking group, and serves as the group head office of the entire RZB Group, including RBI.