Draslovka Nordic Bonds: 6.6 Billion Crown Secured Deal

Chemical company Draslovka, which is one of the world’s largest producers of sodium cyanide, necessary for gold mining, signed bonds on the Nordic market for 325 million dollars, which translates to roughly 6.6 billion crowns. The bonds have an interest rate of 11 percent and mature in 2030. The transaction is expected to improve the company’s balance sheet and bring a significant reduction in financing costs, the company said in a press release on Thursday. The company pointed out that it is the first Czech company to enter the Nordic bond market.

“We consider our debut on the bond market to be very successful. The great interest of investors in the issue and the high quality of institutional investors confirm the great resilience of our business model, a correctly set strategy and the quality of our cash flows,” said CEO of Draslovka Pavel Brůžek. These are senior secured bonds.

Upon completion of the transaction, which includes a partial early repayment of loans including financing from JP Morgan, the company is expected to obtain a clearer capital structure and achieve a significant reduction in cash financing costs.

The bonds will be issued by NewCo Holding EUR 29 S.à rl, registered in Luxembourg, which will be renamed Draslovka Delta S.à rl and is a wholly-owned subsidiary of Draslovka’s parent company. The company collaborated on the transaction with the Nordic investment bank Pareto Securities, which specializes in issuing bonds with a higher yield.

The chemical holding is controlled by entrepreneurs Petr Pudil, Vasil Bobela, Jan Dobrovský and the Brůžk family. Rating agency Standard & Poor’s (S&P) downgraded Draslovce due to indebtedness. According to S&P, last year’s gross operating profit EBITDA will reach 78 million dollars (1.6 billion crowns), the previous assumption was 90 to 100 million dollars (1.9 to 2.1 billion crowns). Seznam News reported in December that Draslovka’s shareholders had invested $60 million in new capital into the company, roughly 1.2 billion crowns. The company will use the money to repay loans.

“The transaction has taken place. Its goal is to reduce the company’s total debt and at the same time ensure better financial conditions for the newly emerging financing structure of Draslovka,” company spokesperson Vít Kurfürst told the server in December. Draslovka has a term loan of 304 million dollars (6.3 billion crowns), which is due this December. According to Seznam Zpráv, the owners have invested 160 million dollars in the company since 2022, which translates to roughly 3.3 billion crowns.

In January, Draslovka announced a partnership with Swedish sodium battery manufacturer Altris. In its Cologne plant, it will start production of material for the cathodes of sodium batteries. Work on the modification of the line has already begun, the annual capacity is to be up to 350 tons of sodium-ion cathode material.

Draslovka is one of the world’s largest producers of sodium cyanide, a chemical necessary for gold mining. It has a patented technology of glycine leaching during gold mining, which reduces mining costs and environmental burden. It also manufactures other specialty chemicals and reagents and provides services in the application of chemicals in the mining industry and in pest control. At the same time, it is among the major players in the development and production of active materials for sodium-ion batteries.