Evraz Plc, the Russian steelmaker whose biggest investor is billionaire Roman Abramovich, rose to the highest in two years in London trading after announcing plans to repurchase $375 million of shares.
Evraz climbed 6.5 percent to 199.8 pence at 12:18 p.m. in London, the highest level since April 10, 2013.
The company will buy as much as 120.97 million shares at $3.10 each, a 10 percent premium to Tuesday’s closing price, Moscow-based Evraz said in a statement on Wednesday. The tender offer for 8 percent of its capital will close on April 17.
Evraz is buying back shares after cutting debt and boosting profit as a weaker currency curbed ruble costs while increasing the value of exports. Rival Russian steelmakers, OAO Novolipetsk Steel and PAO Severstal, are also increasing capital returns to shareholders.
“In view of strong positive cash flow and the liquidity to service debt and meet 2015 maturities, as well as the reduced 2016 debt redemption requirement, the board is announcing the tender offer,” Evraz said.
The company cut net debt by 11 percent to $5.8 billion, lowering the ratio of net debt to earnings before interest, taxes, depreciation and amortization to 2.5 from 3.6 a year earlier. The steelmaker said it may consider returning more cash to shareholders should that ratio remain below 3.
Evraz has enough cash to repay about $1 billion of debt due in 2015, Chief Financial Officer Pavel Tatyanin said in a phone interview. With most of that maturing in the fourth quarter, the company will decide whether to refinance part of that debt later in the year, he said.
The company agreed with OAO Gazprombank to refinance a $500 million loan maturing in 2016 with a 475 million-euro loan, 30 percent of which will be payable in June 2018 and the rest 12 months later, Tatyanin said.
Ebitda rose 28 percent to $2.3 billion in 2014 even as revenue declined 9 percent, Evraz said. The company reported a net loss of $1.3 billion after a $540 million asset impairment and a $1 billion foreign exchange loss.
Free cash flow before debt repayments and dividends was $1 billion.
Evraz has no plans to merge or spin off its coal assets, or to delist its OAO Raspadskaya coal unit, Chief Executive Officer Alexander Frolov said in the phone interview. The company is still weighing the option of an initial public offering for its North American unit, Tatyanin said.