Coal Energy raises USD 70 mln loan from EBRD

EBRD approved a USD 70 mln, 7-year committed credit line to Coal Energy (CLE PW) at a rate of 5.85% over 6M LIBOR, the company reported Dec.13. The loan can be drawn during the next three years. As had been previously announced, the funds will finance the construction of a second waste recovery and beneficiation facility, the Chapaeva Mine mechanization, as well as be used for Coal Energy’s working capital needs.

Roman Topolyuk: The obtained debt financing matches the company’s total investment needs for FY2013, which Coal Energy estimated at USD 70 mln. This ensures that the company will continue to implement its expansion program, despite the challenging market environment (CLE plans to ramp up coal mining 38% yoy to 2.2 mmt in FY2013 and 32% yoy to 2.9 mmt in FY2014). Larger production capacities will strengthen Coal Energy’s positions on the export market since the company will be able to negotiate long-term contracts with large overseas buyers of steam coal. At the same time, we estimate that the company will draw only part of the EBRD’s credit line in FY2013, mainly to refinance existing, more expensive loans (at an effective rate of 10% in 1QFY13 vs. the EBRD’s 6.4%), and finance the bulk of CapEx via operating cash flow. The company will need some time to finalize design and project work for its second waste recovery and beneficiation facility.