Azerbaijan, Baku, July 12 / Trend S. Suleymanov /
KMG Exploration Production announced about its intention to purchase bonds issued by JSC National Company KazMunayGas worth $ 220 billion tenge (equivalent to $ 1.5 billion) with maturity of three years, the company spokesman said.
"This transaction will allow to diversify and reduce credit risks associated with our contractors, while maintaining the company's ability to finance growth strategy. The purchase also helps to increase the transparency of use of the company's funds for shareholders", KMG Deputy General Director for Economics and Finance Zhanneta Bekezhanova said, commenting on the deal.
"This transaction will allow a group of KMG companies to effective use existing cash resources, while protecting the interests of minority shareholders of KMG Exploration Production. We are committed to a long-term mutually beneficial cooperation between KMG Exploration Production and KMG National Company in the interests of all shareholders", KMG general manager for corporate finance and asset management Ardak Kassymbek said.
According to the press service of the company, the nominal value of bonds issued June 25, 2010, will hit $ 1.5 billion, coupon rate - 7 percent per annum, circulation period - three years. The deal will allow KMG to finance the acquisition of assets from KMG National Company after exceeding a certain rate, by crediting the appropriate amount of bonds. Moreover, according to the terms of the transaction, KMG National Company will make a set-off amounts of future dividends from KMG compared to the corresponding amount of bonds in circulation. "The deal will diversify and expand the credit position and reduce the risks," a press release said.
The decision to purchase the bonds will be approved by independent directors of KMG Exploration Production in accordance with the requirements of the treaty on the relationship, between KMG Exploration Production and KMG National Company, which are related parties. Independent directors, supported by expert evaluation of NM Rothschild & Sons Limited, consider a deal on purchase of the bonds as an equitable and acceptable for minority shareholders of KMG Exploration Production.
Terms of the bond issue were reviewed by the rating agency Moody's Investors Service, assigned rating "Baa2" to the bonds.
KMG is Kazakhstan's national operator for exploration, extraction, processing and transportation of hydrocarbons, representing the state's interests in oil and gas industry of Kazakhstan. KMG owns approximately 63 percent of ordinary shares in KMG Exploration Production. JSC National Welfare Fund SamrukKazyna owns 100 percent of KazMunaiGas's shares.