EBC Floats $150 Million Bond Offering

EBC Floats $150 Million Bond Offering European Bearing Corp. (EBC, Russian Federation) announced plans to sell USD $150 million worth of Eurobond credit-linked notes, maturing October 2010. EBC is the largest Russian bearing manufacturer, with 37% of the overall market. The company has six bearing plants -- five in Russia and one in Kazakhstan. Its primary strengths derive from guaranteed, closed market sales -- including a 95% market share of Russia's railroad bearings and 98% of Russia's high-precision aerospace bearings. Together, rail and precision aerospace accounted for approximately $163 million of EBC's $250 million total sales in 2005. The lead manager for the new bond issue is Russia's MDM Bank, although secondary players are from Cyprus and the Netherlands. MDM has issued a highly detailed 30-page research report detailing EBC's operations, the Russian bearing industry and related market information, dated September 2006. MDM bank is arranging the sale of the notes, which will carry coupons of 9.5% and 9.74%. This issuance follows the $35 million in three-year bonds floated in October 2005, carrying coupons of 8.75% in 2006 and 9.35% in 2007. Those bonds financed the late 2005 acquisition of Samara Aviation Bearing Plant. The new bond issue will reportedly allow EBC to retire all of its more expensive bank loans and reduce interest payments significantly. The company may also consider strategic acquisitions, particularly in automotive-related markets where it is weakest.