Debt financing

Credit rating

Elkem is rated BBB/Stable from Scope.

The rating was affirmed in Q4-2022 and reflects Elkem's strong cost position and robust financial risk profile. Furthermore, it reflects Elkem’s position as one of the leading companies in the global silicone and advanced materials markets with a solid global footprint.

Green bond framework

Sustainability is the core of Elkem’s corporate strategy, and the goal is to reach net zero emissions while also growing the supplies of products critical for the green transition.

Elkem has established a Green Bond Framework, which is a further step towards increasing Elkem’s engagement and investments in a more sustainable direction.

The Framework is aligned with the market standard for green bonds: the International Capital Market Association’s Green Bond Principles (GBP) 2021 (with June 2022 Appendix 1).

S&P Global Shades of Green has provided the second party opinion and rated the framework medium-green.

You can read more by downloading the Elkem Green Financing Framework here and the second party opinion from S&P Global Shades of Green here.  

General policy

Elkem aims to maintain an investment grade profile and targets a leverage ratio in the level of 1.0 – 2.0x. Leverage is defined as Net interest bearing debt to LTM (last twelve months) EBITDA.

Elkem aims to keep a liquidity reserve of not less than 10% of the group’s annual turnover. The liquidity reserve is defined as cash and available credit lines.

Elkem will target a smooth maturity profile and a diversified loan portfolio. The intension is to refinance any significant debt obligation well in advance of its final maturity date. Elkem will primarily follow a floating interest rate policy.

Credit facilities

Elkem has a revolving credit facility of EUR 500 million maturing in 2027 provided by a syndicate of relationship banks. In addition, the bank syndicate has provided a term loan of EUR 500 million, also maturing in 2027.

Elkem has a loan of EUR 40 million from Nordic Investment Bank (NIB) with a tenor of eight years from 2015. The loan is repaid in semi-annual instalments, ending on 23 October 2023.

Elkem ASA has issued a series of floating and fixed rate loans in the Schuldschein market, amounting to EUR 261 million, all senior unsecured loans. Amount and pricing are as follows:

• EUR 21 million, maturing in 2024, floating rate 6-months Euribor + 1.40% p.a.
• EUR 15 million, maturing in 2024, fixed coupon rate of 1.816% p.a.
• EUR 25 million, maturing in 2025, floating rate 6-months Euribor + 1.55% p.a.
• EUR 165 million, maturing in 2026, floating rate 6-months Euribor + 1,50% p.a
• EUR 35 million, maturing in 2028, floating rate 6-months Euribor + 1,75% p.a.

Bonds

Elkem has issued the following bonds:

In addition, Elkem has various local financing in China, consisting of short-term working capital facilities and long-term loans related to the expansion of the Xinghuo silicones plant. The loans have a maturity of to 10 years, maturing in 2032.

For more details regarding outstanding amounts and maturity profile, please refer to Elkem’s latest quarterly report and presentation.

Financial covenants

Elkem has two financial covenants in some of its external loan agreements;

• Interest Cover Ratio - shall exceed 4.00:1.00
• Equity Ratio - shall be equal to or more than 30 %.

These financial covenants apply to bank facilities at Elkem ASA level, NIB and Schuldschein loans. No financial covenants apply to local bank financing in China or NOK bond financing.