The UK’s export credit agency has extended a guarantee to US construction giant Bechtel for the first time, for the construction of a motorway in Serbia.
UK Export Finance (UKEF) provided Bechtel with a buyer credit facility to cover a €430mn loan arranged by JP Morgan, according to statements from UKEF and Ashurst, the law firm which advised both the bank and UK agency.
It is also the first time UKEF has concluded a deal with Serbia’s finance ministry, Ashurst says.
Bechtel, in a joint venture with Turkish contractor Enka, will build a 112-kilometre “5G-ready” motorway through the Morava Corridor, a road linking the Serbian towns of Preljina and Pojate. The motorway’s design also includes an in-built flood defence system. Construction began in early 2021, according to Enka’s website.
The deal is worth around £126.5mn to the UK economy, UKEF says. The agency expects UK exporters to provide exports such as machinery, vehicles and insurance during the course of the project.
“This partnership between Bechtel and UKEF will boost UK exports, drive investment, support jobs and bolster local economies, helping us build back better from the pandemic,” says UK international trade secretary Anne-Marie Trevelyan.
UKEF declined to confirm if other lenders are involved in the loan, for which JP Morgan acted as the initial mandated lead arranger. The bank declined to comment on the specific financing arrangements.
“We are both proud and thrilled to have led the execution of the first UKEF-backed financing in Serbia,” says John Meakin, JP Morgan’s global head of export finance.
“This is an important project, bringing crucial infrastructure improvements to the country and connecting communities and businesses.”
Brendan Bechtel, Bechtel’s chief executive, says: “This welcome support from UK Export Finance will allow Bechtel, together with our partner Enka, to deliver this transformational infrastructure project using goods and services exported from the UK.”
“At a time of post-Covid recovery, this investment in the supply chain will benefit both the UK and Serbian economies and will also enable Bechtel to continue to grow our partnerships in both countries.”
UKEF and JP Morgan have also co-operated on a US$210.8mn financing facility for the government of Iraq in 2018.
A year earlier it also backed US$117mn in financing for Enka and GE for a separate deal in Iraq, which attracted scrutiny from a parliamentary committee which questioned whether the company had sufficient ties to the UK to qualify for UKEF support.