A Russian manufacturer has sealed €123mn in credit, to help upgrade its plant facilities.
The borrower, Oil and Gas Systems, is a producer of pipeline valves for use in the energy industry. The finance was arranged by the EBRD, which contributed €73mn from its own book in the form of an ‘A’ loan, syndicating the remaining €50mn to Nordea Bank in the form of a ‘B’ loan.
The development tranche has an eight-year tenor, with the commercial portion maturing in 7.5 years.
The finance will be used to complete a greenfield hot press stamping plant in the Tula region of Russia, as well as the modernisation of a nearby foundry shop.
An EBRD spokesperson tells GTR that the development bank’s continued support of manufacturing in Russia is essential for economic development. He says: “This is clearly a sector whose revival and development is vital for the Russian economy. The EBRD strategy since the beginning has been to help Russia diversity from independence on raw materials exports (mainly oil and gas).”
The Tula region is a prominent industrial centre in Russia, associated with metalworking, engineering, coalmining and chemical industries. The additional facilities constructed by Oil and Gas Systems will supply half-body casings for pipeline valve production, which will be sold to various Russian export industries, including energy and chemicals.
The EBRD’s director for industry, commerce and agribusiness in Russia says the bank is “proud to continue its support to a regional privately-owned company that is operating to world-class standards”.
The EBRD also provided the same company with a €90mn direct loan in December 2010, with a further €25mn syndicated to the commercial banking sector. The previous loan was used to finance a similar project.