(Updates with interest rates in fourth paragraph.)
Dec. 28 (Bloomberg) -- Evraz Plc, Russia’s largest steelmaker, said its North American division agreed to borrow as much as $610 million to refinance loans as it seeks to reduce debt costs.
The five-year revolving credit facility will replace two loans of $225 million and C$300 million ($294 million), Evraz said today in a statement. A portion of the financing will be used to fund working capital and other “corporate purposes” at its U.S. and Canadian subsidiaries, it said.
Evraz, which reported debt of $7.2 billion at the end of September, is refinancing loans as it seeks to expand while protecting credit ratings. The steelmaker said this month it plans to increase production of rails at a plant in Pueblo, Colorado, boosting the mill’s capacity by 10 percent to 525,000 metric tons a year from 2013.
The company agreed to pay interest at 1.5 percent to 2 percent over the London interbank offered rate, compared with rates of 3.25 percent and 4.25 percent for the existing loans, Evraz said. GE Capital Markets Inc., GE Capital Markets (Canada) Ltd., Merrill Lynch, Pierce, Fenner & Smith Inc. and UBS Loan Finance LLC arranged the transaction, the company said.
“It’s surprising news because the rate is low,” Kirill Chuyko, a Moscow-based analyst at UBS AG, said today by telephone. “This is good for Evraz.”
Evraz’s shares started trading on London’s FTSE 100 index on Dec. 19.
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