Alexander Perov, senior expert of National Energy Security Foundation

– Rosatom is enhancing its financial and operational stability

State Atomic Energy Corporation Rosatom is planning to conduct a large loan over its affiliate JSC Atomenergoprom (the company unites civil nuclear enterprises).

This loan has two goals: to get long-term capital for financing Rosatom’s projects and to restructure short-term debts (which is quite topical for the moment). Thus, Rosatom is enhancing its financial and operational stability. It will be very good if Rosatom manages to restructure its short-term debt into long-term one.

The bonds will help the industry to reduce its credit management costs. This issue is guaranteed by Rosatom, so, it is very secure. As a result, investors will regard the debts on these bonds as state debts. A loan of a company operating in the nuclear industry cannot be compared with a loan of a private company even if the latter is a very good company. Very soon these short-term debts will have to be repaid. Re-financing is hardly possible now and, even if possible, would be effected at a very high interest rate. So, the decision to issue a loan was quite logical. When a company issues a bonded loan, it should publish a prospectus and make public the key aspects of its financial activity and the mechanisms it is going to use to repay its debts. This is a kind of a price it has to pay to investors for the opportunity of successful partnership. On the other hand, such transparency is stipulated by the legislation, and so, it is inevitable.   

The issue a bonded loan for long-term projects will stimulate the inflow of money and will keep afloat the industries like machine building and construction. As you may know, the nuclear industry is the key customer of the machine building sector. So, the latter will get lots of benefits: wages, social guarantees, long-term contracts.

The debts will be repaid from own profits. Judging from the results of 2008, the company is able to do it. I think that part of the loan may be bought by state banks like Sberbank, VTB or Gazprombank. It is a very big sum and we must do something to ensure its placement.

As on the terms of loan placement 10 documentary interest-bearing inconvertible bond series are planned for emission whereas each bond will be 1,000 RUR. The bond’s maturity is five years. The bonds will be placed during a year starting from the state registration of issue.

The bonds will be placed by public subscription by means of purchase and sales transactions at tenders held by CJSC MICEX. ROSATOM is securing all the bond emissions.

Part of the attracted funds is planned be channeled to refund short-term loans attracted by the industry’s enterprises. Another trend is financing part of investment program for subsidiaries and affiliates in 2009 – 2010. In particular among the fund receivers are JSC Energoatom Concern (implementation of NPPs construction program), JSC TVEL (modernization and renewal of nuclear fuel production), ARMZ Uranium Holding (development of mining assets in Russia and abroad within the set up joint ventures), JSC TENEX and JSC United Company Enrichment Sublimation Complex (modernization and renewal of production facilities with the shift to a new generation of gas centrifuges), and JSC Atomenergomash (investments into nuclear engineering for implementation of the NPPs’ new units commissioning program).

JSC Atomenergoprom provides full production cycle in nuclear power industry consolidating leading enterprises and organizations of the industry (its history is over 60 years) and the experience accumulated over the whole range of NFC and NPP building technologies (at present the issuer’s consolidation perimeter incorporates the largest enterprises of nuclear energy industry namely: Atomredmetzoloto, TENEX, TVEL, Energoatom Concern, separation and sublimate complex enterprises as well as enterprises of engineering and service, development of new technologies, etc). According to the consolidated reporting of the company, the issuer’s revenue in 2008 (disregarding the joining date of subsidiaries and affiliates) was 290.5 bn. RUR, the revenue was 146.5 bn. RUR in the first half of 2009, and the profit was 14.4 bn. RUR.