BRAMA, Feb 3, 2004, 1:00 pm ET
Press Release
Yuzhmash successfully launches USD 107.5 million 5-year Notes
London – On January 23, 2004, Yuzhny Machine Building Plant (“Yuzhmash”) successfully priced an issue of USD 107.5-million 5-year Notes. The Notes issue was completed via Colvis Finance, a United Kingdom SPV, and was backed by a loan between Colvis Finance and Yuzhmash, which was unconditionally and irrevocably guaranteed by Ukraine. The Notes are being sold outside of the United States pursuant to Regulation S of the U.S. Securities Act of 1993 and have been priced at 100% with the annual coupon of 8.00%. The transaction is expected close on or about February 2, 2004. Yuzhmash has applied for a listing of the notes on the Luxembourg Stock Exchange. JPMorgan acted as the sole lead manager and bookrunner for this offering, which was rated ‘B1’ by Moody’s Investor Service and ‘B’ by Standard&Poor’s.
As the longest-dated Eurobond to date in the corporate sector to come out of Ukraine, Yuzhmash’s issue establishes a new medium-term benchmark for corporate borrowers from the country. The total order book was well oversubscribed, with 26 investor accounts participating, and achieved a broad geographic investor distribution in Europe.
“This transaction was of strategic importance for Yuzhmash and also for Ukraine. Given the complex structure of the offering, Yuzhmash and JP Morgan, the lead manager of the Offering, worked extremely closely together to achieve what we see as an outstanding result. It is clearly important for any new issuer in the market to work with a leading investment bank, such as JP Morgan, in order to achieve not only a successful placement but also a placement at compelling prices. The lead manager permanently advised Yuzhmash on all aspects of the deal and we felt at all times that we had an accurate feedback on investor preferences regarding tenor and coupon of the offering. As a result, we chose a structure with a 5 years tenor and a coupon of 8% which enabled us to place the bonds with strategic investor accounts throughout Europe; in fact we managed to broaden the already existing pan-European investor base for Ukraine. Furthermore, given that the recent transaction for the City of Kiev, also with a 5 years tenor, was structured with a coupon of 8.75%, we feel very satisfied to have achieved significantly better terms”, said Mr. Alexeev, the General Director of Yuzhmash.
“The transaction was very challenging from a legal point of view, given that some parameters such as the original loan agreement and guarantee dated back to 1998 and could not be changed or amended. We managed to achieve an outstanding result given these tight boundaries by using the full and unconditional guarantee in the best possible and legal way”, further commented Mr. Vashenko, the Partner at the International Law Company, the legal counsel of Yuzhmash.
Yuzhmash is one of the world’s leading rocket manufacturers and one of the largest industrial enterprises in Ukraine as measured by assets.
This press release does not constitute an offer of the Notes for sale into the United States. The Notes may not be offered or sold in the United States or to, or for the account or benefit of, US persons (as such term is defined in Regulation S under the U.S. Securities Act of 1933) unless they are registered with the US Securities and Exchange Commission or pursuant to an exemption from the registration requirements of the U.S. Securities Act of 1933. There will be no public offer of the Notes in the United States.
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