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$190m loan for acquisition of stake in major Russian pipe plant
Deal is largest EBRD acquisition loan ever; Standard Bank to underwrite $95m
The EBRD is lending Chelyabinsk Tube Rolling Plant $190 million to finance the
acquisition of a 57.22 per cent stake in another Russian pipe plant. Standard
Bank is acting as sole underwriter for $95 million being syndicated under an
EBRD A/B loan structure, whereby the EBRD remains the lender of record for the
full amount.
The loan, which promotes consolidation of a major sector of Russia’s metal
industry, is the largest acquisition finance ever provided by EBRD.
The EBRD’s funding has enabled Chelyabinsk Tube to acquire a controlling stake
in Pervouralsk New Pipe Plant, which has an 11 percent share of the Russian
pipe market and whose production is expected to reach 700,000 tonnes this
year. Pervouralsk is 40 km from the major Urals industrial centre of
Ekaterinburg.
The maturity of the EBRD loan will be six years, while the syndicated portion
is four years.
Soaring demand for all types of pipe, fuelled by much higher than expected oil
and gas prices, provides the industrial logic for this deal, said Noreen
Doyle, EBRD First Vice President. The EBRD also welcomes the borrower’s
commitment to improve its corporate governance further, thus setting an
example to other players in the industry, Ms. Doyle added.
Urals-based Chelyabinsk Tube, the largest such plant in the former Soviet
Union, has a Russian market share of 13 per cent. Its output is expected to
reach 760,000 tonnes this year.
In 2002, Chelyabinsk Tube borrowed $50 million from the EBRD to fund a
modernisation programme which is expected to be completed in the first quarter
of 2005. Half was syndicated to three commercial banks: Raiffeisen Zentralbank
Oesterreich, Commerzbank and State Bank of India.
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