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JSC Russian Railways has awarded a mandate to Barclays Capital, Dresdner Kleinwort Wasserstein, HSBC Bank and RZB, as initial mandated lead arrangers and bookrunners, to arrange a US$600mn syndicated term loan facility.
The facility, fully underwritten by the initial mandated lead arrangers, consists of a three-year tranche with a bullet repayment, amounting to US$300mn and a five-year tranche of US$300mn with an amortising repayment. The facility will be used for general corporate purposes and represents the debut transaction of Russian Railways in the European capital markets.
Bookrunners are Barclays, DresdnerKW, HSBC and RZB.
DresdnerKW is also documentation agent and facility agent.
HSBC is in charge of the information memorandum.
Russian Railways is working with the mandated lead arrangers to prepare general syndication which will be launched in September. Before this there will be a senior phase syndication, which will be targeted primarily at Russian Railway’s relationship banks.
Russian Railways is a 100% state-owned rail transportation monopoly. It is the largest railway company in the world with revenues in 2004 of US$23bn and operating profit of US$2.4bn.
The company has a market share of 83% of freight (excluding petroleum) and 43% of passenger transportation market in Russia which underlines its immense strategic importance to the Russian economy.
Russian Railways is expected to retain its monopoly ownership of the country’s rail infrastructure, and the vast majority of railroad cars and locomotives.
Russian Railways was recently rated by Fitch to BBB (unsecured rating, stable outlook).
This is the second investment level rating of the corporation, as the first investment rating was issued by Moody’s in 2004. Russian Railways is the first Russian company that has been issued two international investment ratings.