Ukraine’s Metinvest returns to ECA market
Metinvest has secured a €43.2mn buyer credit facility for its subsidiary Ilyich Steel which is being guaranteed by Austrian export credit agency Oesterreichische Kontrollbank Aktiengesellschaft (OeKB).
It is the first loan covered by an export guarantee to be provided to the Ukrainian steelmaker since 2012, and the company’s first-ever from OeKB.
Raiffeisen Bank is the sole lender on the facility, which matures in September 2025. The interest rate has been set at 6-month Euribor plus margin.
The funds will be used to finance the construction of a continuous casting machine (CCM) for Ilyich Steel, a steelmaking plant in Mariupol, Ukraine. The CCM is being supplied by metallurgical plant solutions company Primetals Technologies Austria.
“It is yet further proof that European financial institutions believe in Ukraine in general and the Metinvest story in particular,” says Metinvest CEO Yuriy Ryzhenkov. “This project is one of the key investments in the group’s steel business envisaged by the ‘Technological Strategy 2030’, which aims to increase overall steel production capacity. It is also difficult to overstate the positive effect of this project in reducing our environmental footprint in Mariupol.”
Following the commissioning of the new CCM, expected by the end of 2018, the existing ingot casting line will be taken out of operation and the blooming mill will be shut down. The launch of the CCM will enable Ilyich Steel to cut costs by reducing metal losses and energy consumption, while boosting output of crude steel and finished products. When implemented, the CCM will also help to improve the environmental situation in the city of Mariupol by reducing the dust content in flue gases following gas cleaning, the company says.
The news follows Metinvest’s announcement in April that is had refinanced US$2.3mn of its existing debt through two new bond issuances and a US$765mn pre-export finance (PXF) facility.
The transaction was the largest-ever refinancing by a Ukrainian corporate.
Deutsche Bank and ING served as global co-ordinators and, together with Natixis and UniCredit, acted as joint bookrunners of the bond refinancing and co-ordinating mandated lead arrangers (MLAs) of the PXF deal. On the legal side, Allen & Overy and Avellum advised Metinvest, Linklaters and Sayenko Kharenko supported the bookrunners, and Clifford Chance and Redcliffe Partners advised the co-ordinating MLAs.
The transaction also generated an additional US$205mn in liquidity, which the group used to settle the first PXF repayment before it was due. It then announced last week that amid “decent cashflow” it had voluntarily paid another part of the PXF facility. The remainder due is now US$528mn.
Metinvest secured its first ever ECA-backed facility in 2012. The €25mn 10-year buyer credit facility was backed by Euler Hermes and paid an interest of 1.95% a year, with Deutsche Bank taking on the role of sole arranger and sole lender.take me back