Eesti Energia suffered loss by refinancing bonds

Monday, 21 September 2015

Estonian state-owned energy company Eesti Energia suffered an accounting loss by refinancing bonds that took place last week because it bought old bonds for a price higher than nominal, Postimees Online reports.

Eesti Energia issued last week 500 million euros worth of bonds, for which it bought 248 million euros worth of bonds, which will mature in 2018 and 193.7 million euros worth of bonds with a maturity date in 2018, Eesti Energia announced to the London Stock Exchange. A total for 441.7 million euros. Thus, the transaction brought 58.3 million in accounting damages.

Eesti Energia said that this will not affect the company's one-time profit.

"The lower interest rate and long maturity of the new bonds more than compensate for this difference in the income statement. Also, in cash flows the refinancing of bonds has a positive effect on the interests paid since we replaced the 4.25% and 4.5% coupon bonds with 2.384% coupon," explained Eesti Energia.

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