KomerčÂníÂ banka (KB) – as a member of Société Générale group – in cooperation with Czech export credit agency (ECA) Egap, provided the first multisourcing abroad in the history of the Czech Republic last year. The transaction, for borrower Gazprombank in Russia, was also the first financing of a 100% ECA cover premium for this type of the project in the history of Egap.
“The structure of this project is considered as a pilot project not only for KB but for Egap, who can also present this deal as one of the most successful in its history,” declares Pavel Wasserbauer, Komercni banka’s head of export finance, in Prague.
The 6.25-year loan for Gazprombank covers the delivery of technological equipment for corrugated board production and construction of new plant building in Dmitrov, Moscow region, Russia. The loan amount of €16.14mn is for 84 % of total contract value, plus 100 % of ECA cover of €785,677 – a total credit of around €16.926mn.
Gazprombank had only two conditions when mandating arrangers: that the financing of respective deliveries and services also finance 100% of the ECA cover premium (it was possible to finance only 85% of the ECA cover premium up to this moment in the Czech Republic) and to have only one insurance agreement for the whole credit.
This requirement was connected to the fact that German and French portions of sub-deliveries were relatively high: there were six individual commercial contracts in different currencies signed between the importer and each sub-supplier while the Czech deliveries were less than the OECD Consensus require, ie, less than 50%.
Due to this fact Egap had to arrange reinsurance with Euler Hermes and Coface, but KB still had one insurance agreement with Egap.
To solve the problem of several individual commercial contracts it was necessary to establish a consortium of suppliers consisting of Unistav (Czech Republic), BHS Corrugated Maschinen-Anlagebau (Germany), Bobst (Switzerland), Martin (France), Intraco Engineering (Austria) and Taiwan Endurance (Taiwan),” says Wasserbauer. “The suppliers entered into a consortium agreement, providing for the best co-ordination of joint activities in the project.
“Due to conditions arising from the OECD Consensus it was necessary to appoint Czech building company Unistav as the leader of the consortium. Russia’s Gofra, acting as importer, entered into separate contracts with each of the abovementioned exporters for the delivery of technological equipment for corrugated board production and construction of the new plant building.”
Contract amounts were the following: Unistav – €8.1775mn (42.5% of aggregate amount); BHS Corrugated Maschinen-Anlagebau – €5.129mn (26.71%); Martin – €4.1815mn (21.76%); Bobst – €705,188mn (3.68%); Intraco Engineering – €490,528mn (2.56%); Taiwan Endurance – €530,000 (2.77%). The aggregate amount of all delivery contracts total €19.2135mn
“The synergy was effected by providing the letters of credit (LC) to solve the topic of maximum assurance of payment for third parties. Two export LCs were used – one directly to the Czech exporter in the amount of €14mn – and a transferable LC to the sub-suppliers of technology,” adds Wasserbauer.
HVB (Germany), Taiwan Cooperative Bank (Taiwan), UBS (Switzerland), Bank Austria Creditanstalt (Austria), and Credit Lyonnais (France) confirmed LCs for their various national suppliers.
“At the beginning of the project nobody, from the suppliers to the importer, believed in the positive realisation of this project with regard to assured payment for their deliveries. Now the project is practically finished, all members of the consortium are contented with its running, and they have appetite for another deal,” says Wasserbauer.
The swift arrangement of this financing structure (within three months), including the establishment of a consortium of suppliers, a guarantee of payments especially for some European sub-suppliers, ie, the achievement of mutual agreement within 10 different members of the financing, were all very impressive.
“Based on this pilot project we are working on virtually the same deal again in Russia with the same participants but only in a different area,” adds JiříÂ Flégl, export finance specialist at KB. “It will practically totally copy the same scheme of financing. Otherwise, elsewhere a few other multisourced projects, eg, in Russia, Ukraine and Ireland, have just been negotiated.”
Borrower: JSB Gazprombank
Mandated lead arranger and lender: Komercni banka
Reinsurers: Coface; Euler Hermes
Margin: Euribor plus 60bp
Importer: OOO Gofra
Suppliers: BHS Corrugated Maschinen-Anlagebau; Bobst; Intraco Engineering; Martin; Taiwan Endurance;Unistav;
Date signed: February 2006