High-yielding securities of Valletta company to shortly enter the
start-up market of corporate bonds

arminfo
2007-06-30 00:22:00

High-yielding securities of Valletta, one of the leading multi-industry
Armenian companies, will shortly enter the start-up market of debt
instruments. Today, an agreement on formation of a group for placement
of inaugural issue of the bonds was signed at the ArmSwissBank. The
underwriting syndicate comprised ArmSwissBank, which is the main
underwriter of the issue, as well as Conversebank, Armenian Development
Bank (ADB) and Future Capital Market, an investment and broker’s
company. On behalf of the syndicate, an agreement on guaranteed
placement of bond loan was also signed between the issuing company and
ArmSwissBank. It is planned to hold the procedure of securities’
registration in the Central Bank of Armenia (CBA) next week.

The ArmSwissBank press-service told ArmInfo correspondent that the
volume of issue of undocumentary coupon bonds of Valletta will total
350 mln AMD. This amount will be divided into 7 thsd securities; the
nominal value of each will be 50 thsd AMD. The period of the bond
turnover is 18 months with 10.5% of yearly interest. Coupon payments
will be carried out once every six months. The bonds are secured by the
Valletta’s property and stipulate supplementary guarantees by the
company’s owners.

According to the Chairman of ArmSwissBank’s Board, Gevorg Machanyan,
the issue of Valletta’s bonds is unprecedented for the Armenian market
not only because the issue considerably exceeds the bonds traded in the
market by its volume and profitability, but also by its mechanism of
initial placement through forming of an underwriting syndicate. Under
the agreement, ArmSwissBank is to purchase bonds worth 175 mln AMD,
Conversebank – 75 mln AMD, ADB and Future Capital Market – 50 mln AMD
each. "In late July, the securities will be listed at the Armenian
Exchange (ArmEx), and they will enter the REPO market. Initially we
were going to put the bonds on the secondary market, that’s why
ArmSwissBank was granted license for broker’s, dealer’s and depositing
activities," G.Machanyan noted. According to his estimations, at the
moment the demand for Valletta LLC’s bonds in the secondary market
totals about 150- 200 mln AMD. "We managed "to form" a maximally
convenient and attractive instrument for investors both by yield and
liquidity," the Head of the bank said. He added that the bank is ready
to secure the liquidity constantly. To note, the interest rate on bonds
exceeds the treasury curve by 4-4.5% at the mean. G.Machanyan pointed
out that this won’t be the only issue of the company. In August, the
company is planning to organize a new issue of bonds. According to the
business plan, the company intends to hold three issues worth a total
of $7 mln in 2007.

The manager of Valletta’s financial programs, Anna Gevorgyan, told the
ArmInfo correspondent that the funds received from the inaugural bonded
debt will be spent on restructuring of financing sources and
reduction of the value of the company’s loan proceeds, as well as on
capital investment in implementation of new programs; a small part of
the money will be spent on replenishment of floating funds.
"Restructuring, i.e. reduction of the value of loan proceeds has become
one of the strategically important tasks of our company which is
conducting quite successful and diversified business," A.Gevorgyan
emphasized. According to her, capital investments will be directed to
creation of a network of cafes of the world famous Italian company
Segafredo Zanetti in Armenia on a franchising basis. The floating funds
are to increase the import component of the company’s activity and form
sufficient commodity stocks for further development of the retail
market in the person of Star, the largest network of supermarkets in
Armenia, affiliated with Valletta.

To note, Valletta holds the 33rd place on the list of the largest
Armenian tax payers. A number of processing industries, restaurants, a
network of stores, as well as firms engaged in import of household
equipment, operate within the framework of the company. On the basis of
its financial condition, the company was rated ‘B-‘ by CBA specialists.

According to the data of ArmInfo, ArmSwissBank, which was established
in 2005, is developing in investment, corporate and private banking.
According to the financial accounting as of early April, the total
capital of the company was $8.6 mln, assets – $25.8 mln, financial
investments of them totalled $8.9 mln.