Azernews.Az

Most of the funds received by Azerbaijan’s state energy firm Socar from the placement of Eurobonds in the amount of $500 million were spent to pay the assets in Switzerland, purchased from Exxon Mobil, a Socar official told the Baku-based Trend news agency.

Socar signed an agreement with Exxon Mobil to acquire its Swiss branch, Esso Schweiz GmbH, in November 2011. The company will operate under the brand name Esso within 12 months after a change of ownership.

"Some $200 million of proceeds from the placement of Eurobonds was sent to acquire the assets in Switzerland," the Socar representative said.

The company will take over several Esso businesses in Switzerland, including a fuel wholesaler and aviation fuel supply businesses at Geneva and Zurich airports. It will own a retail network consisting of 170 filling stations, gas filling plant in Wangen bei Olten, and the supply company that controls joint ventures managing terminals and pipelines.

Part of the funds from the placement of Eurobonds, in the amount of $133 million, is intended for the purchase of 10 percent of the state-owned share of Turkish petrochemical complex Petkim, which is co-owned by Socar.

Previously Socar Turkey Enerji, the Turkish division of the Azerbaijani state energy firm, started construction of a new oil refinery in Turkey in order to meet Petkim’s needs for raw materials.

Petkim Petrokimya Holding manufactures plastic packaging, fabric, PVC, detergents, and is the only Turkish producer of such products, 25 percent of which is exported.

The rest of the proceeds from the Eurobond issue - $166 million - focused on external debt of the company, the Socar official said. The $133 million were used to repay the loan borrowed from BNP Paribas and $33 million to cover the loan provided by the Turkish Yapi Kredi Bank.

Socar’s loan portfolio amounted to $1.5 billion as of January 1, 2012.

Socar has successfully completed the placement of a debut Eurobond issue in London on February 2. The Eurobonds were of great interest among investors. The total volume of orders submitted by 290 investors totaled $4.6 billion.

The Eurobonds totaling $500 million issued by Socar have a yield of 5.45 percent per year. The maturity date of the primary Eurobonds is February 9, 2017.

Socar plans to make an additional issue of Eurobonds in the amount of $250 million in the near future.

Excess of demand over supply 10 times was observed during the placement of Socar Eurobonds. In this regard, the consultants suggested that Socar make an additional placement on the same terms and in a short period of time.