It’s a steel for NLMK

The first international loan syndication for well-known borrower Novolipetsk Steel (NLMK) caught GTR’s eye last year. NLMK is one of the world’s largest steel producers. The integrated steel-making company produces pig iron, slabs, hot-rolled, cold-rolled, galvanised, pre-painted, transformer and dynamo steel.

BNP Paribas and Société Générale CIB were appointed as co-ordinating mandated lead arrangers, bookrunners and hedge providers for the five-year US$1.6bn syndicated loan facility. Due to successful syndication, the initial amount of US$1.5bn was upsized to US$1.6bn, resulting in oversubscription, despite adverse market conditions. Some 18 lenders joined the facility despite very aggressive pricing.

Bank of Tokyo-Mitsubishi UFJ (BTMU), Deutsche Bank, Sumitomo Mitsui Banking Corporation Europe (SMBC) and UniCredit joined as mandated lead arrangers and bookrunners; ABN Amro and Fortis as mandated lead arrangers and KBC, Bayerische Landesbank and WestLB as senior lead arrangers. BBVA, Intesa Sanpaolo, Landesbank Baden-Württemberg, Lloyds TSB, Bank für Arbeit und Wirtschaft and DZ Bank joined the facility following a successful oversubscribed syndication. BNP Paribas acted as the facility agent. The facility bears an interest of Libor + 1.2% per year.

This debut syndicated facility for NLMK gave an opportunity to the wide range of international banks to establish a relationship with the first-class borrower, who has been virtually debt-free in the last few years.

“Even though the transaction was NLMK’s debut in the international syndicated loan market, they made a big splash at the time with an oversubscribed syndication and terms comparable to that of seasoned Russian borrowers,” says Ilia Poliakov, managing director and deputy head of the Russia and CIS department within the natural resources and energy financing group at Société Générale. “The terms of the NLMK transaction were landmark in a way seen often with those sought by state-owned RZD, Norilsk Nickel and major Russian oil and gas companies.”

In December 2007, the company acquired control of Maxi-Group. The proceeds of the loan were used for, inter alia, general corporate purposes including an investment programme at NLMK. The borrowings under the syndicated loan facility are secured against the company’s steel export revenues.

Deal Information

Borrower: Novolipetsk Steel (NLMK)
Amount: US$1.6bn
Co-ordinating mandated lead arrangers and bookrunners: BNP Paribas; Société Générale CIB
Mandated lead arrangers: Deutsche Bank; Bank of Tokyo-Mitsubishi UFJ (BTMU); UniCredit; SMBC; ABN Amro; Fortis
Additional lenders: KBC; Bayerische Landesbank; WestLB; Lloyds TSB; Intesa Sanpaolo; LBBW/LRP; BBVA; DZ Bank; Bank für Arbeit und Wirtschaft
Law firms: Lovells (banks) and Debevoise & Plimpton (NLMK)
Margin: 1.2%
Tenor: 5 years
Date signed: July 2008