In a bid to improve its loans position and reduce costs, Russian diamond producer PJSC Alrosa paid off US$120 million and refinanced US$600 million of a US$720 million debt due in 2019 that had an interest rate of 4.3%.
The company said Dec. 5 that it found the opportunity for lowering its borrowing costs after S&P Global Ratings upgraded its long-term corporate credit rating to BB+ in July thanks to a strong financial performance in 2016 and the first half of 2017.
In doing so, the company has reduced its debt to US$1.84 billion. Alrosa refinanced the US$600 million through two new loans of US$350 million and US$250 million with Raiffeisenbank and Rosbank, respectively. The loans mature in December 2018.
The company chose to repay the remaining US$120 million using free cash flow.
"The impact of lower interest rate payments driven by these initiatives will exceed US$30 million," CFO Alexey Philippovskiy said.
The suspension of Alrosa's Mir pipe at its Mirny Division following a flood in August had a significant impact on the company's financials in the third quarter. Profit for the period plummeted 51% year on year and EBITDA fell 30%. It remains unclear how long it will take to restore operations at the Mir pipe.
