Citibank London, arranger of the issue, had been trying to place the 2017 maturing bonds at an interest rate of 9.75 percent and 10 percent in dollars, according to S&P.
The yield offered by RCS&RDS was not enough for investors though, who asked for a higher interest given the international economic context and the company’s current indebtedness level, banking sources told Ziarul Financiar daily.
RCS&RDS’ debts are 2.5 bigger than operating income (EBITDA). Talks held in London last week did not have a positive outcome, as foreign investors’ interest was low considering RCS&RDS did not want to pay an interest rate higher than 10 percent in dollars, the above-quoted sources said. According to S&P, RCS&RDS needs money to bolster its low level of liquidity (just 5 million dollars in September 2009) and to finance its current debts and a series of undergoing acquisitions.
The company has short-term debts worth 59 million dollars and financial amortisation operations worth 150 million dollars each scheduled in 2011 and 2012, related to the 500 million dollars loan contracted from ING and Citi in 2007, according to S&P. The operator reported an operational profit of 78 million dollars in the first nine months of 2009, at a volume of 518 million dollars in revenues.