Last Updated May 28, 2008
Interpipe, one of the world's leading producers of steel pipes and railway wheels, has closed a debt funding package of US$531mn to finance the construction of a 1.32mn ton steel electric arc furnace (EAF) in Dnepropetrovsk, Eastern Ukraine. The debt financing includes a US$344mn Sace-backed export credit facility with a tenor of 10.5 years and fixed interest rate of 3.78% throughout the life of the loan and a pre-export finance facility secured by deliveries of steel pipes under export contracts, which has a tenor of four years and is priced at Libor + 2.25%.
The remaining project costs will be provided by project sponsor equity. The total cost of the project is US$735mn, including taxes, financial costs and insurance, with the cost of equipment and infrastructure approximately US$525mn.
The facility represents one of the largest investments in the Ukraine since the country's independence, according to Oleksandr Cherniavskyi, CFO of Interpipe. It also constitutes the largest transaction made by SACE in the country to date and reflects the continuous growth of trading flows, particularly in the metallurgical sector, between Italy and Ukraine, according to Fabio Fritelli, managing director responsible for global business at the Italian export credit agency.
Barclays Capital and Citigroup were appointed as joint mandated lead arrangers and underwriters for the export credit facility with Barclays Capital acting as sole bookrunner The pre-export finance facility featured Barclays Capital and Citigroup as joint bookrunners and mandated lead arrangers and was syndicated to a group of 13 international banks with an oversubscription of over 50%.
"This financing reflects Citi's commitment not only to a highly valued client, but also to the country's development. We look forward to continuing a long-term relationship with Interpipe and hope to support the company with its future financing needs, given its extensive expansion program”, comments Nadir Shaikh, Citi country officer for Ukraine.
"Barclays Capital is pleased to have had the opportunity to assist Interpipe in securing favourable financing terms from SACE to fund its new electric arc furnace. Export credit agencies represent a valuable new funding source for both government and companies to build projects vital to improving Ukraine's transport and industrial infrastructure. We look forward to working on additional such financings in Ukraine,” comments Bob Mabon, Barclays managing director responsible for Ukraine.
Interpipe closed its first syndicated loan facility in the international loan market in 2007, securing a four year US$100mn pre-export finance facility with a margin of 240bps via mandated leader arranger Commerzbank.
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