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. Last Updated: 07/27/2016

X5 Group Postpones Bonds Issue

X5 Retail Group delayed its 9 billion ruble ($345.2 million), seven-year bond issue due to poor market conditions, the company said Monday.

The issue is the first of three tranches of X5's planned 25 billion ruble ($959 million) bond originally scheduled for placement in 2007 and early 2008, and aimed to refinance the company's existing debt and fund development.

"We intended to use the net proceeds of the first tranche planned for March-April 2007 to improve our debt structure, taking advantage of favorable market conditions by converting our foreign currency loans into the ruble zone and extending our debt maturity," X5 CFO Vitaly Podolsky said in a statement.

"However, while market conditions are improving after a recent global market correction, current volatility of the market makes this operation unattractive at this stage," he said.

"Although we think that the news could have a slight negative impact on the share price, we do not believe the announcement should affect the group's fundamentals or hurt its investment plans," Aton brokerage said in a note.

"We also note that the group's financing requirements for organic growth over the next three years should be covered by existing debt, and management has made it clear that its acquisition of Karusel, if this occurs, would be financed by new equity," Aton said.

X5 has recently said it would consider issuing shares in the second half of this year to acquire Karusel hypermarkets it has an option to buy at the start of 2008, according to the merger conditions.

The firm said it would announce the date of the bond placement in due course, depending on market conditions and corporate funding requirements.