It is reported that after EBRD approved a USD 36 million loan for Sadovaya Group to finance its waste recovery business on November 22. The 7 year loan will be issued at 3 Month LIBOR up by 6.5% yielding a low effective interest rate of 7% as of end November.

This loan will finance 75% of project costs for construction of four enrichment factories which is USD 48 million in total. Sadovaya is planning to launch the first facility in Q2 2012, the second in Q4 2012, marking the first stage of the project.

According to Phoenix Capital analyst “The news is positive for SGR. The overall fundamental impact of the news is positive, though it brings certain changes to the previous guidance of the company as to how the waste recovery segment will be developed. Sadovaya Group shifts the launch date of the two first waste recovery factories from November-December 2011 to Q2 2012 and Q4 2012 and has not yet outlined schedule for the other two. This alone implies cuts to our projections of 2012 EBITDA almost in half from USD 66 million to USD 34 million. Nevertheless, the stock still trades at a 43% discount to peers on 2012F forward EV/EBITDA multiple. On the bright side, 7% of the effective interest rate will make average cost of debt capital for SGR lower, positively improving the valuation side. Secondly, the company currently plans to construct and launch four enrichment factories with total a capacity of 1.1 million tonnes instead of the scheduled two factories with total capacity of 740,000 tonnes. These two factors together, if recalculated in our DCF model, more than compensate for the postponed launching of the waste recovery facilities, assuming the high capacity load of this equipment.”

(Sourced from www.phoenix-capital.ua)