Kazakhstan’s first cement plant based on more energy-efficient ‘dry’ technology will be built near Astana thanks to a landmark financing signed last year. A package comprising an export credit agency (ECA)-backed facility of €50.98mn and a commercial loan facility of €46.64mn was agreed between lender Fortis Bank and Kazakhstan’s Bank TuranAlem (BTA) on behalf of BI Cement.
BI Cement is part of BI Group, one of the leading construction companies in Kazakhstan. BI Cement was established in 2006 to meet the huge demand for cement due to the construction boom in Kazakhstan.
PSP Engineering, Czech Republic, is the beneficiary under the letter of credit. It is the exporter and provider of the goods and BI Cement is consignee of the goods.
The deal sets a new benchmark in terms of tenor for Kazakhstan. It provides financing of 85% of the contract amount for a 10-year term under a buyer’s credit covered by Czech ECA Egap and commercial financing of the advance payment and the local cost portion under the contract for an eight-year term.
“Both the Egap-covered buyer’s credit and the commercial tranche were signed and closed three months after we were mandated by BTA for the financing of the BI Cement project,” says Charles-Henri Lafont, manager in global export and project finance at Fortis Merchant Banking. “Such a tight schedule was achieved by a close step-by-step follow-up of the involved parties. The utlisation of our framework agreement with BTA, as well as the reactivity of Egap, were essential in this process.”
Fortis has signed multisource framework agreements with five Kazakh banks.
The package involves financing of the import of equipment produced in the Czech Republic and financing of local contracts signed with local sub-contractors in Kazakhstan.
It is the biggest transaction by Egap and Fortis Bank that uses an ECA/commercial loan facility structure in Kazakhstan.
“The flexible structure of the financing, allowing sufficient grace under the commercial facility and financing of interest during construction under the Egap-covered loan allowed it to arrange a bridge loan for financing of the down-payment under the contract before completion of loan documentation,” says Timur Sabyrbaev, director of financial institutions and global trade finance, at BTA.
The project is a breakthrough deal within a Kazakh government programme aimed at boosting the growth and stability of the economy through economic diversification and infrastructure development, as well as creating a base for high technology industries.
“Above all, the BI Cement transaction highlights the professionalism and know-how of Egap, which has large underwriting capabilities and extensive risk analysis skills,” adds Pavel Sverak, director, head of export and project finance at Fortis in Prague. “In recent years, Czech exporters of capital goods have finalised important commercial contracts in countries where Fortis is very active – such as the CIS and Southeast Asia. At Fortis, we consider the potential for financing Czech exports high: that is why we decided to open an export and project finance (GEPF) entity in Prague to follow Czech exporters. Two other Egap-covered buyer’s credits are ready to close and we have a good pipeline for 2008.”
Says Pavol Parizek, Egap’s chairman and managing director: “Egap is preparing other projects with similar or more importance in the region. Apart from construction of a glassworks, there is a construction of combines for production of construction materials. Especially in supporting construction materials technology exports, Egap has recently insured credits for construction of a brick factory in Ukraine and cement works in Tajikistan and Vietnam.”
Applicant: BI Cement LLC, Kazakhstan
Beneficiary: PSP Engineering, Czech Republic
€50.983mn ECA facility (10 years)
€46.64mn commercial facility (8 years)
Sole lender: Fortis Bank
Tenor: 7-10 years
Pricing for Egap facility:
- Margin: Euribor /6 months/ + 0.145% pa
- Management fee: 0.1% flat
- Commitment fee: 0%
Pricing for commercial facility:
- Margin: Euribor /6 months/ + 2.35% pa
Date signed: July-August 2007
- Management fee: 0.20% flat
- Commitment fee: 0.15% pa