By Maria Kolesnikova
Oct. 1 (Bloomberg) -- OAO Acron, Russia’s third-largest nitrogen fertilizer producer, said it may borrow as much as $2.2 billion from state-run banks OAO Sberbank and VTB Group to fund an expansion.
The company is in talks to get a credit line of as much as $550 million at Sberbank for a phosphate mining project and another for “three times” that amount at VTB to fund a potash mine, Chairman Alexander Popov said in an interview in Moscow. The Velikiy Novgorod-based company expects to sign the loan agreements in November, he said.
Acron needs about $3.5 billion to build phosphate and potash mines to satisfy its raw-material needs. It has proposed placing the deposits in a joint venture with the government in exchange for the loans required for their development. Acron may also consider selling its 8.1 percent stake in OAO Silvinit, Russia’s biggest potash producer, to finance the mining projects, Popov said.
The company is seeking government guarantees on as much as 10 billion rubles ($332 million) of the Sberbank and VTB facilities and a deferral on interest repayments, Popov said yesterday. It expects to pay less than 9 percent interest on the dollar- denominated loans, he said.
VTB spokesman Maxim Lunyov and Sberbank spokesman Alexander Baziyan declined to comment.
Acron is also in talks about developing the potash and phosphate deposits with other potential partners, who would provide funding or will buy some of the output, Popov said. Acron will only consume 25 percent of the potash produced and 40 percent of the phosphates when the mines reach full capacity, he said.
The company expects to sell its potash output independently rather than join an existing trading group, he added.
Acron may also sell 3.5 billion rubles in bonds by the year-end as part of a plan to refinance short-term debt, Popov said.
To contact the reporters on this story: Maria Kolesnikova in Moscow at mkolesnikova@bloomberg.net
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