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Sberbank of Russia

06/03/2021 | Press release | Distributed by Public on 06/03/2021 08:35

Sber, VEB.RF, and partner banks open financing for Kingisepp ammonia and carbamide construction

Sber, VEB.RF, and partner banks - VTB, GPB and Otkritie Bank - have signed all loan and collateral documents regarding the construction project by EuroChem-Northwest-2, which is building the second phase of the ammonia and carbamide facility in Kingisepp. The signing ceremony took place during the St. Petersburg International Economic Forum with the following dignitaries: VEB.RF Chairman Igor Shuvalov and the CEO of EPC (Maire Tecnimont contractor) Pierroberto Folgiero.

Sber, VEB.RF, and partners will lend EuroChem-Northwest-2 a total of about RUB 100 bn, with the first RUB 27 bn tranche from the syndicate of banks organized by Sber and VEB.RF to be sent shortly. The syndicated loan will account for 80% of the project budget excluding the optional VEB.RF tranche to cover interest and increase the project budget with a total size of about RUB 123 bn net of VAT.

The production facility with an annual capacity of 1.1 mn metric tons of ammonia and 1.4 mn tons of carbamide is scheduled to begin operation in 2024. This is the second phase of the industrial site. The first phase involved putting into operation an ammonia production facility with a capacity of 1 mn metric tons a year. The facility ships its products to more than ten countries.

We have been working with EuroChem across a variety of areas for a long time now, and we must say all its initiatives are thought-through. As an organizer of this syndicated loan that is a landmark for the Russian market, Sber is happy to provide financial assistance to a major project like that. The construction of a world-class high-tech plant will significantly strengthen the position of the country and EuroChem in the world market for carbamide and ammonia.

Andrey Shemetov

Senior Vice President, Head of SberCIB

The project finance that VEB.RF, Sber, VTB, Gazprombank and Otkritie provided for the construction of the second stage of the ammonia plant in Kingisepp, Leningrad Region, by EuroChem is the largest one on record for our company. It should be emphasized that EuroChem is implementing a project like that with Russian banks for the first time, and for the first time, a debt-to-capital ratio of 80 to 20 has been achieved. The funding of the second stage of the EuroChem-Northwest-2 facility construction will give a new and additional impetus to the continued development of the cluster of our enterprises in Kingisepp, which started after the commissioning of the EuroChem-Northwest-1 plant two years ago.

Vladimir Rashevskiy

CEO, MCC EuroChem JSC

Export-oriented projects are among the strategic lines of work for VEB.RF. In the new VEB.RF strategy, export still plays a vital role as we focus on promoting our offerings across new markets. Arranging financing for gas chemical projects is an important mission, and it implies major capital investment. This calls to ensure the availability of long-term money for enterprises. It is also crucial that Kingisepp will become a pilot project for the integrated development of territories in our portfolio. We are talking about the construction of housing that meets modern standards, as well as schools and kindergartens. The latest planning solutions and architectural concepts are being developed for them. In the future, we plan to scale up the approach to the implementation of integrated development of territories in other cities.

Nikolay Tsekhomskiy

First Deputy Chairman, Member of the Board, VEB.RF

VTB and EuroChem are united through long-term and successful cooperation. We are very excited to have the opportunity to support the construction of a modern production site, the next stage of the ammonia and carbamide facility. Enterprises like that deepen the processing of natural gas and increase Russia's export potential, create jobs and ensure budget revenues, which is vital for the development of the region and supporting the well-being of its people. Furthermore, it is of the utmost importance to us as a lender that the company applies advanced technologies to ensure the efficient processing of raw materials and cyclical use of resources.

Dmitry Snesar

Head of Client Coverage, Senior Vice President, VTB

Gazprombank has been running large-scale investment projects together with leading producers of mineral fertilizers for a few years now. This is one of the few sectors of the global economy that has been seeing consistent increase in production and consumption. The EuroChem-Northwest-2 project will contribute to the company's export vertical, but also benefit the domestic chemical industry at large. Launching a large-scale production on a tight schedule requires many parties to consolidate their efforts, and we are pleased to be among the financial partners EuroChem chose to implement this high-tech project with.

Alexey Belous

Deputy Chairman of the Management Board, Gazprombank

Otkritie Bank pays close attention to financing projects with high export potential. The partnership with EuroChem is fully aligned with our development strategy, and we are excited it's being reinforced further. The EuroChem-Northwest-2 project will create new facilities to produce ammonia and carbamide, which will facilitate the growth of non-primary export and create new jobs in Kingisepp. Let me also commend the coordinated work of commercial creditors and VEB.RF, due to which an optimal project finance solution was found and it was combined with several state support measures.

Viktor Nikolaev

Deputy President, Chairman of the Management Board, Otkritie FC Bank

The project is supposed to add USD 0.4 bn to the annual non-primary export of Russia. At the busiest phase of facility construction, as many as 8,000 workers will be engaged. The facility will create 354 new high-tech jobs.