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Ukraine’s Industrial Union of Donbass (IUD) production units, OJSC Alchevsk Iron & Steel Works (AMK) and OJSC Dneprovsky Iron & Steel Integrated Works (DMK), have signed a US$250mn three-year pre-export finance facility through joint lead arrangers and bookrunners ABN Amro and SG Corporate & Investment Banking.
The transaction marks the largest ever pre-export finance facility for a Ukrainian corporate. It also marks one of the largest corporate debt raisings undertaken in the Ukraine.
Sergei Taruta, chairman of the board at Industrial Union of Donbass, says: “The success of this facility highlights the growing trust of the international finance community in our strategy and our efforts to place the company in the first rank with other major world steel producers.”
IUD is one of the Ukraine’s largest industrial holdings. Its core assets, AMK, DMK and Hungarian steel producer Dunaferr, had a combined crude steel output of 8.6mn tons in 2004.
Prabhat Vira, head of global commodity finance at ABN Amro, says: “This heavily oversubscribed facility is IUD’s largest to date and, because of our very close relationship with the client, it was arranged very quickly.”
Philippe Landry, managing director, structured commodity finance, metals and minerals at SG CIB comments: “With this highly successful and praised facility, SG is once again proud to accompany IUD along the road to international growth and success”.
The senior phase of syndication was successfully closed on August 12, 2005, with a strong group of five international banks joining the facility as mandated lead arrangers: BNP Paribas (Suisse), Commerzbank, Natexis Banques Populaires, RZB and WestLB.
General syndication is completed and resulted in a heavy oversubscription, reflecting investor appetite for both the company and for Ukraine.
Proceeds from the facility will be used to finance working capital needs, investments in connection with the production and export of steel and steel products and to refinance existing financial indebtedness.
The facility comprises a US$250mn three-year secured term loan steel pre-export finance facility amortising in 27 equal monthly instalments after a nine-month grace period, out of which US$175mn will be borrowed by AMK and US$75mn by DMK. The contractual
margin over Libor is 3.65% per year.
The signing marks IUD Group’s second transaction in the international syndicated loan market and follows a successful US$85mn debut pre-export finance facility led by SG in early 2005.
ABN Amro will act as agent under the facility.