ABN Amro, Banca Intesa, Fortis and Société Générale Corporate & Investment Banking, as mandated lead arrangers (MLAs), with the European Investment Bank (EIB) and Italy’s Sace have closed a €350mn financing for Türk Otomobil Fabrikasi (Tofas).

The purpose of the transaction is to finance a new assembly line in Tofas” Bursa-based plant for the production of a new light commercial vehicle to be distributed in the Western European markets by Fiat and PSA.

The transaction involves a 10-year structured financing with assignment of the rights of offtake agreements to Fiat (Italy) and PSA (France).

Headquartered in Istanbul, Tofas is one of the major car makers in Turkey. The company was established in 1968 as a Turkish-Italian cooperation venture to manufacture passenger cars and light commercial vehicles under licences from Fiat Auto. Co-owned by Koc Holding (the largest private Turkish conglomerate) and Fiat, it also produces various automotive spare parts used in its automobiles.

In March 2005, Tofas signed a strategic partnership with Fiat and PSA to produce annually 135,000 new vehicles per year from 2008. This partnership is considered a major undertaking for Tofas, as it will allow to increase its annual production by 80%.

In order to diversify its sources of funding and to obtain longer financing tenors Tofas decided to use export credit agency cover (Sace) and the EIB which could offer attractive financing terms.

The facilities consist of two tranches:

  •  A buyer credit supported by Sace, for a total amount of €175mn (1.5-year drawing and eight-year repayment).
  •  An EIB facility for a total amount of €175mn (1.5-year drawdown and eight-year repayment period). This facility is split into one tranche of €140mn for which the mandated lead arrangers delivered a guarantee for the commercial risk and a second tranche of €35mn under which the EIB retains full commercial and political risk.

ABN and Société Générale have been mandated by Tofas as global coordinating banks. During the arranging phase ABN acted as technical and modelling bank, Société Générale acted as documentation agent and Fortis and Intesa acted jointly as Sace and EIB agent.

In the post-signing phase, ABN Amro will be security agent while Société Générale will be intercreditor agent. Fortis will act as Sace agent and Intesa as EIB agent. The four MLAs are lenders and guarantors in the two facilities with equal participation.