Germans raise the ceiling

On November 23, 2006 Deutsche Bank signed a €65mn financing package with Bank TuranAlem (BTA) in Almaty to support the construction of a metallurgical plant to produce silicon metal in Kazakhstan.

The deal involves the largest ever German export credit agency (ECA)-supported loan in Kazakhstan – Euler Hermes acting on behalf of the Federal Republic of Germany. Valued at €56.2mn and with a 10-year tenor, it exceeds the current Euler Hermes limit per individual transaction for Kazakhstan.

Euler Hermes has now approved the increase of the overall ceiling for BTA risk from €70mn to €150mn.

BTA provides a wide range of financial services including corporate and retail lending, trade financing, leasing, brokerage and insurance. As of November 2006, BTA’s assets exceeded US$11.8bn, while its total equity capital exceeded US$1.6bn.

Thyssen KruppMannex, Duesseldorf, a member of ThyssenKrupp Group, will supply related equipment to Silicium Kazakhstan. The financing from Deutsche Bank covers 100% of the import portion, the insurance premium for the ECA cover and interest during construction.

The overall financing also involves a bridge financing by Deutsche Bank as well as a local cost portion which will be extended by the Development Bank of Kazakhstan.

Deutsche was instrumental in securing Euler Hermes support for this project which resulted in an increase in the ECA’s overall risk ceiling for BTA from €70mn to €150mn.

“The flexible structure of the financing provides a sufficiently long grace period under the commercial facility and financing of interest during construction under the Hermes-covered loan,” states Timur Sabyrbaev, head of financial institutions and global trade finance, at Bank TuranAlem. “We also arranged a bridge loan from Deutsche Bank in order to finance the downpayment under the contract before the loan documentation was fully completed.”

In the context of the economic diversification programme of the Kazakh government, this deal is vital to the country. The successful implementation of this project will create a new industry and open up the fast growing market of silicon metal to Kazakhstan.

The project also is important from a social point of view as it creates 220 jobs with favourable labour conditions: 130 in the plant and 90 in quartz deposits in Aktas and Akshoky-III. Realisation of the project will lead to the development of infrastructure in the Pavlodar and Karaganda regions.

“Taking into account the issue of environmental protection, we are sure that the future metallurgical plant, equipped with high automatisation technology and high gas cleaning, will be one of the first in the CIS,” adds Sabyrbaev.

Silicium Kazakhstan was founded in March 2006 for realisation of this project. One of the bigger participants in Silicium Kazakhstan, Basko, is a valued customer of the bank. Basko started its business activity in 1991 and is involved in sales of oil products, growing of crops, grain storage, poultry and cattle breeding, and metallurgy. BTA has arranged medium and long-term trade financing for most of Basco’s projects, says Sabyrbaev. 


Deal information

Borrower: Bank TuranAlem
Amount: €65mn
Split into:
–         Tranche A: €8.8335mn
–         Tranche B: €56.1995mn
Arranger: Deutsche Bank
ECA: Euler Hermes
Tenor: Tranche A – 7 years; Tranche B – 10 years
Margin: Tranche A -2.2% over 6 month Euribor; Tranche B – 0.25% over 6 month Euribor
Date signed: November 2006