Société Générale Corporate & Investment Banking has signed an Austrian buyer credit and a tied commercial loan with Transport and Communication Development Investment Corporation (Tracodi), for the Phuong Nam Kenaf Pulp Mill project in Vietnam.
SG CIB was the mandated lead arranger, agent and sole lender for this €67.1mn export finance transaction with Tracodi, Vietnam.
The credit facilities will finance the delivery by Austrian supplier Andritz of equipment and services for a pulp mill project based on state of the art technology that will use the kenaf plant for raw material. The financing allows Tracodi to build a green field kenaf market pulp mill situated 60km south-west of Ho Chi Minh City.
The pulp mill will have a production capacity of 100,000 tons per year of market pulp, made from 100% kenaf. The use of the technology, called P-RC APMP, is the latest development in mechanical pulping technology, yielding pulps with superior optical and mechanical properties at high energy efficiency, high yield and minimum impact on the environment.
The project is of strategic importance for Tracodi’s development in the pulp mill industry, as well as for the Long An province where the pulp mill will be located. This project will help to satisfy the demand for paper in Vietnam and abroad, creating 30,000 jobs in the area.
The financing, which benefits from a guarantee from the ministry of finance of Vietnam, consists of an Austrian buyer credit and a tied commercial loan in order to finance the commercial contract. The financing structure is based on a reinsurance agreement between Oesterreichische Kontrollbank (OeKB), the Austrian export credit agency, and the German (Euler Hermes) and Swedish (EKN) export credit agencies, granting a comprehensive credit cover on the Austrian buyer credit.