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Interpipe Completes Financing for Dnepropetrovsk Steel Mill Project
06/10/2008 - Steel pipe and railway wheel manufacturer Interpipe finalizes financing arrangements for development and construction of a new, 1.32-million-tonne/year EAF-based steel mill.
Steel pipe and railway wheel manufacturer Interpipe has finalized financing arrangements for the development and construction of a new, 1.32-million-tonne/year electric arc furnace (EAF) steel mill. The new facility, which is to be built in Dnepropetrovsk, Eastern Ukraine, is being funded through a debt financing package totaling US$531 million; remaining project costs will be met through project sponsor equity.
The debt financing, for which Barclays Capital (the investment banking division of Barclays Bank PLC) acted as Advisor, comprises a US$344 million SACE backed Export Credit Facility and a US$187 million Pre-Export Finance Facility.
The US$344 million Export Credit Facility has a maturity of 10.5 years and benefits from a SACE first demand unconditional guarantee covering 85% of the loan. The fixed interest rate is set at 3.78% throughout the life of the loan. Barclays Capital and Citigroup were Joint Mandated Lead Arrangers and Underwriters for the Export Credit Facility with Barclays Capital acting as Sole Book runner.
The US$187 million Pre-Export Finance Facility has a 4 year maturity and is priced 2.25% above Libor. The facility is secured by deliveries of steel pipes under export contracts. Barclays Capital and Citigroup were appointed as Joint Book runners and Mandated Lead Arrangers for the Pre-Export Finance Facility, which was syndicated to a group of 13 international banks. The syndication was oversubscribed in excess of 50%.
“This transaction demonstrates the support of the international financial community for Interpipe and Ukraine,” said Interpipe CFO Oleksandr Cherniavskyi. “Interpipe has obtained competitive pricing and long tenors despite the difficult conditions prevailing in the international financial markets. The new debt facilities support Interpipe’s strategy to increase the vertical integration of its steel production. This project represents one of the largest investments in Ukraine since the country’s independence.”
Interpipe is a major global producer of steel pipes and the 2nd-largest producer of forged railway wheels in the world with total revenue of $1.8 billion in 2007. It is an export-oriented company with 71% of its 2007 revenues derived from export sales supplying products to 76 countries in the world.
In 2007, Interpipe mills produced 1.5 million tons of steel pipes and railway wheels: 62% of its pipes for the oil and gas industry, 35% for industrial applications, and approximately 3% for mechanical engineering. The company’s production assets are based at three Ukrainian mills in the Dnepropetrovsk region. The company has a network of sales offices in Ukraine, Russia, Kazakhstan, Europe, the U.S., and the Middle East.
