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EBRD lends Russia’s 2nd biggest pipemaker total of 205 million Euros
7-year tenor of syndicated part is longest achieved for Russian metals producer
The European Bank for Reconstruction and Development entered into a loan
agreement with Russia’s 2nd biggest pipe producer for the equivalent of 205
million Euros . The loan will finance a new mini-mill based on energy
efficient, low emissions technologies, and will restructure the group’s
balance sheet to help it implement its investment programme.
The loan to the CHTPZ group is divided into two tranches. Part of each tranche
is being syndicated to commercial banks with the Bank remaining the lender of
record for the full amount.
The first tranche of 145 million Euros covers the construction of mini-mill at
Pervouralsk with the EBRD providing 50 million Euros on its own account and
syndicating the remaining 95 million Euros. The tenor will be nine years for
the EBRD’s A loan and seven years for the syndicated B loan.
An 80 million USD second tranche will refinance two of the existing EBRD loans
to the group, reducing debt payments and extending maturities. Half of this
second tranche will be syndicated. The tenor of the A and B loans under this
second tranche will both be seven years.
EBRD 1st Vice President Varel Freeman said at a signing ceremony during the
Bank’s Annual General Meeting in Kazan that these new loans confirmed the
benefits of a long partnership with a group committed to improvements in
corporate governance and ready to invest wisely not only in raising the
quality of its output, but also in energy efficiency and a cleaner environment.
In 2004, a $190 million EBRD loan enabled Chelyabinsk Tube to acquire a
controlling stake in Pervouralsk New Pipe Plant in what proved a major sector
consolidation. Chelyabinsk Tube Rolling Plant and the Pervouralsk New Pipe
Plant, whose integration was completed in the fist quarter of 2007, are the
core assets of CHTPZ Group, one of the leading industrial groups in the
Russian metallurgical sector.
An audit financed by the Greek government identified a series of investments
needed to improve energy efficiency at both plants. These will be partly
funded by the first tranche of the EBRD’s loan and are expected to generate
energy savings of at least eight percent.
The new mini-mill will allow the group to close down its outdated open hearth
furnaces, which are very inefficient in terms of energy usage and are also the
source of significant air pollution. They will be replaced by modern electric
arc furnaces. It will also enable the group to reduce significantly its
dependence on outside suppliers of round steel billets, the semi-finished raw
material used by both the Cheliabinsk and Pervouralsk plants for the
production of seamless pipes.
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