Landmark steel transaction for Ukraine
Kiev, July 21, 2004: Azovstal Iron & Steel Works, Ukraine’s third largest steel producer, today announced that it has secured a USD 100m loan through a club deal led by ING as Mandated Lead Arranger, Bayerische Hypo- und Vereinsbank AG and Deutsche Bank AG Amsterdam Branch as Lead Arrangers and Credit Suisse as Arranger. ING is Facility & Security Agent and Ukrainian Account Bank.
This structured steel pre-export finance facility is the largest structured deal in Ukraine to date. Given the size and the tenor, the loan is a breakthrough for the Ukrainian steel industry, which requires significant investments in upgrade and development of the existing production facilities and sizeable medium term financing.
The facility was concluded on June 24, 2004 and disbursed in July 2004. The facility is secured upon deliveries of steel produced by Azovstal to Leman Commodities S.A in Geneva, Switzerland as an off-taker. It has a 24 months tenor with straight-line amortisation following a 6-month repayment grace period. The funds will be used by Azovstal to finance its reconstruction plan for 2004 as well as its general working capital purposes.
Oleksiy Petrovych Bely, General Director of Azovstal stated that: This is a notable event for Azovstal in particular, as well as for Ukraine in general. The provision of the facility not only provides attractive financing opportunities, but underlines the trust the international banking community has in the company, the industry and the country”.
Leman Commodities’ Managing Director Felix Blitshteyn said: “As a major exporter of Ukrainian steel products, we have spent many years building up confidence amongst Western Banks regarding Ukrainian risk, especially in the steel industry. It is rewarding to see the fruits of our work and we certainly feel that there are many more opportunities for Western investors in the future”.
Simon Buck from ING Geneva explained that “the loan, originally planned at USD 50m, was very well supported by 3 large international banks and as a result was increased to USD 100m”. Ivan Bondarenko at ING in Amsterdam added: “We are confident in the future of Ukraine's steel industry and would like to expand further in this sector”.
Azovstal Iron & Steel Works is Ukraine’s third largest steel mill. It plans to produce 5.9 mio mt of steel in 2004. Leman Commodities S.A. is one of the world’s largest steel traders with a total volume above 8 mio mt annually.
