1 Dec, 2010
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BLOOMBERG: Sadovaya to Raise $60 Million in IPO to Expand Output

Daryna Krasnolutska

Sadovaya Group S.A., a Ukrainian coal producer, plans to raise $60 million for investment in capacity by selling a quarter stake through an initial public offering.

The proceeds from the Warsaw offer of 20-25 percent of the company will pay for equipment, two coal enrichment plants and licenses to expand output, co-owner Alexander Tolstoukhov said.

“We have applied for licenses that will allow us to expand our current coal mines and to extract coal from two new deposits in 2007,” Tolstoukhov said in a phone interview from the city. “Now it is time to pay for them. It will increase our reserves of coal by 100 million metric tons.”

BG Capital JSC, BG Trading Ltd. and Dom Maklerski BZ WBK S.A. will manage the sale and Bank Zachodni WBK S.A will advise.

Sadovaya, Ukraine’s fourth-largest private energy coal mining company, plans to increase output to 1.5 million tons next year from as much as 900,000 tons, Tolstoukhov said. It will probably raise output to more than 2 million tons in 2012.

“We supply Ukraine’s electricity producers with our coal as well as steelmakers including ArcelorMittal’s Ukraine unit,” Tolstoukhov said. “We see the demand for coal and its price increasing in future as there is a deficit.”

Sadovaya plans to begin coal exports from next year, he said. “We already have a contract with one company in Bulgaria and we may ship coal to India as well,” he said. About 47 percent of Bulgarian electricity comes from coal, said Dimcho Kanev, head of forecasts and research at the state- run National Electricity Co. on Nov. 25. Coal demand in India may more than triple in the next two decades to 2 billion metric tons, Coal Minister Sriprakash Jaiswal said Sept. 24.

India produces 530 million tons of coal a year and imports about 67 million tons, the minister said.

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