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Demand for OAO Akron's Bond Issue Is 2.2 Times Supply

On 24 September 2009, OAO Akron's second issue of bonds was floated on the MICEX Stock Exchange. As a result of a contest, the interest rate for the first coupon was set by the issuer at 14.05% per annum. The bond yield came to 14.54% p.a. on the two-year put date.

During the float, 193 applications were turned in for a total sum of more than 7.7 billion roubles. The applications turned in by investors indicated interest rates from 13 to 16.50% p.a. The entire volume of the issue was floated during the auction.

ZAO Raiffeisenbank organised the float.

Sberbank Russia was appointed as the leading co-organiser of the issue. Moscow Credit Bank, Promsvyazbank, and UniCredit Bank were also co-organisers of the issue. The underwriters were the Russian National Regional Development Bank and Bank Zenit.

The bonds, which have a total nominal price of 3.5 billion roubles, have a four-year put date. Half-year coupons will be paid on the issue. The interest rate for the first through fourth coupons inclusive will be 14.05% p.a., with the rates of the following coupons to be determined by the issuer. The issuer has also provided for the bearers' right to present the bonds for premature buyback at their nominal price in two years.

Funds from the flotation of the bonds will be used for the refinancing of the company's credit portfolio and the financing of its working capital.

OAO Akron's Vice President for Economics and Finances, Oscar Walters, said, «An optimal moment for entering the market and the organiser's professional work caused great interest in the bonds on the part of investors. This bond issue will allow us to optimize our credit portfolio, increasing rouble debt with the goal of reducing foreign-currency risks. Also, we will in part use the funds to pay off our short-term bank credit debt, which will noticeably improve our resource structure.»

ZAO Raiffeisenbank's deputy head of Corporate Finance and Investment Banking, Oleg Gordienko, noted, «The successful flotation of OAO Akron's bonds is a good sign for the market as a whole and confirms the company's high quality of credit.»

The Akron Group is one of the leading manufacturers of mineral fertilisers in Russia and worldwide. Its wide range of manufactured products includes both compound fertilisers (NPK and dry mixes) and nitrogen fertilisers (carbamide, ammonium nitrate, and urea ammonium nitrate). In 2008, the Group's total manufactured volume of ammonia and mineral fertilisers (not counting domestic use) came to 3.6 million tonnes. The Group's main markets are Russia, China, and other nations with quickly developing markets in South Asia, Latin America, and the former USSR.

There are more than 12,000 people employed by the Akron Group at companies in Russia and China. In 2007, according to its IFRS accounts, the Group's revenue came to 31.105 billion roubles ($1.267 billion); its net profit was 5.668 billion roubles ($231 million). OAO Akron's common stock is included in the MICEX and RTS quotation lists, as well as the London Stock Exchange's official quotation list (ticker tape code AKRN).

The Group's three main manufacturing companies are OAO Akron (Velikiy Novgorod, Russia), OAO Dorogobuzh (Smolensk Region, Russia), and Hungi-Akron (Shandun Province, China). The Akron Group's transportation and logistical options include a fleet of its own rail wagons and three trans-shipping terminals in the Baltic ports of Kaliningrad (Russia), Sillamae (Estonia), and Tallinn (Estonia). The Group has its own sales and distribution network in Russia and China.

In future, the Akron Group plans to follow a strategy of creating a vertically integrated holding and providing manufacturers with raw phosphate and potash in order to create its own resource base. The Group has a licence to develop two apatite-nepheline deposits in Murmansk Region and a deposit of potassium-magnesium salts in Perm Region. (All deposits are located on Russian territory.)

ZAO Raiffeisenbank is a subsidiary of Raiffeisen International Bank-Holding AG. Raiffeisenbank is ranking 9th in terms of assets among the Russian banks based on 1H 2009 results (Interfax-CEA). According to Interfax-CEA, ZAO Raiffeisenbank ranked 4th in Russia in terms of private deposits and 6th in consumer lending in Russia based on 1H 2009 results.

Raiffeisen International operates one of the largest banking networks in CEE. 17 markets in Europe's growth region are covered by subsidiary banks, leasing companies and a range of other financial service providers. The group’s more than 60,000 employees service over 15 million customers via more than 3,100 business outlets. Raiffeisen International is a fully consolidated subsidiary of Raiffeisen Zentralbank Osterreich AG (RZB), which owns about 70 per cent of the common stock. The remainder is in free float, the shares are listed on the Vienna Stock Exchange. RZB is a leading corporate and investment bank in Austria and the central institution of the Austrian Raiffeisen Banking Group, the country's largest banking group.


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