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EBRD will lend a loan to Garadagh Cement

25 June 2009 13:43 (UTC +04:00)

Baku. Nijat Mustafayev â€“ APA-Economics. The EBRD has approved a loan to Garadagh Cement OJSC, said Francis Delaey, head of the EBRD office in Baku.

The EBRD said earlier it was considering arranging the financing of Garadagh Cement OJSC modernisation and expansion.

The company is planning to increase clinker production capacity from 2,616 tpd to 4,000 tpd and annual cement production capacity from 1.1 mt to 1.7mt, without clinker imports. The plant is located approximately 35km south of Baku, the capital of Azerbaijan. The financing will be drawn down during the construction period from mid 2009 through the first half of 2011, when commissioning of the new kiln is expected.

The project will achieve significant energy savings through the use of dry technology (in excess of 50% reduction of energy use per unit of clinker produced). The introduction of state-of-the-art technology will provide the opportunity for a massive transfer and upgrading of skills. The EBRD loan will support a company that pioneers high corporate governance and business standards in a challenging environment. As the largest foreign direct investment outside the oil and energy sectors in Azerbaijan, the project should have a demonstration effect for other potential private sector investors. It is geared to attract co-financing from commercial banks in amounts and maturities not yet achieved outside the oil sector in Azerbaijan.

Garadagh OJSC is the largest cement and sole clinker producer in Azerbaijan. Holcim, a leading global supplier of concrete and cement based in Switzerland, acquired a controlling stake in Garabagh privatisation in 1999. Today it owns 69.4% of the companyâ€™s share capital and provides managerial, technical and commercial resources. The project implementation under a turnkey contract is directly supervised by Garadagh.

EBRD finance:

EUR 170 million structured corporate loan with a senior A/B loan of EUR 150 million, of which approximately 50% will be offered to commercial banks (B lenders), and a EUR 20 million subordinated C loan for EBRDâ€™s account. An additional EUR 30 million loan subordinated to all bank debt is to be provided by Holcim.

Total project cost: Approximately EUR 330 million.