Mandated arranger and bookrunner VTB Bank Europe has signed a US$80mn medium-term structured finance facility for Red October steel works in Volgograd in Russia.
The loan was fully drawn down in December and fully underwritten by VTB Bank Europe. Other banks are also expected to join the financing soon.
The facility carries a tenor of five years, and is secured by the assignment of proceeds under export contracts with foreign buyers.
Red October is a specialist Russian steel producer and was acquired by RusSpecialSteel in March 2007. RusSpecialSteel is based in Moscow and was established in June 2006 in order to create a metallurgical holding through the consolidation and development of specialised steel production assets and other metallurgical commodities.
The loan agreement is the second time VTB Bank has provided medium-term financing to Red October.
"It was important for Red October to secure medium-term financing following the recent change in ownership. VTB Group provided the acquisition finance and is a valuable partner of Red October and JSC RusSpecialSteel,” comments Dmitry Portnov, chief financial officer of RusSpecialSteel.
Glen Unsworth, senior manager, structured and project finance at VTB Bank Europe adds: "This financing continues our long relationship with Red October and further strengthens our relationship with RusSpecialSteel. The close relationships at the steel plant and at RusSpecialSteel meant that putting this facility together was a smooth and effective process.”
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