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Russian fertilizer producer Acron raising 10B rubles in bond placement

Russian fertilizer producer PJSC Acron took applications on Oct. 16 for a placement of 10 billion rubles' worth of 3.5-year bonds, set for Oct. 25, Interfax reported and the company confirmed to S&P Global Market Intelligence.

State-owned VTB Capital and Gazprombank are running the sale of the notes, which carry a 7.25% initial yield, with Unicredit Bank.

Acron's total debt has fallen 3.2% since the start of 2019 to 81.78 billion rubles, or about US$1.27 billion, at the end of the first half, but net debt has been ratcheting up as its cash reserves drain away.

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After a strong start to the year that saw Acron's profit rise more than fivefold in the first half, BCS Global Markets expects results to soften in the third quarter due to a weaker fertilizer market with ammonia prices down 10% quarter over quarter, according to a Sept. 12 report.

The company agreed US$1.7 billion of project financing for its preproduction-stage Talitsky potash mine in Perm Krai with a trio of state-owned banks in June, as well as a Special Investment Contract with the government that enables the company to pay 0% profit tax and property tax. The mine is expected to begin production between late 2020 and early 2023, with a capacity of 2.0 million tonnes of potassium chloride per annum, rising to 2.6 Mt.

Talitsky is expected to raise Acron's EBITDA by 50%, according to BCS Global Markets.

The company's larger, debt-ridden rival PJSC Uralkali looked overseas for a US$500 million issue of five-year notes on Oct. 16, which was heavily oversubscribed.

As of Oct. 16, US$1 was equivalent to 64.17 Russian rubles.