Avangard completes USD 200 mln Eurobond placement

Yesterday Avangard (LSE: AVGR LI) announced the placement of USD 200 mln in Eurobonds (10%, maturing on October 29, 2015). The company plans to use part of the proceeds to repay its debt, including obligations to Avangard’s principal shareholder-affiliated commercial bank Finansova Initiatyva (USD 170 mln), and use the remaining cash to expand its Imperovo egg processing plant. Ruslan Patlavskyy: The Eurobond placement allows the company (1) to refinance its USD 180 mln in short-term bank debt (as of end-1H10), (2) to decrease its cost of debt from 18% (mostly in local currency) to near 10% (in USD) p.a.; and (3) to provide additional funds to expand operations. At the same time, since most of the funds raised will be reinvested, the company should retain a manageable debt level, implying a 1.3x net debt/EBITDA multiple as well as 4.8x EBITDA interest coverage forecasted for 2010E.