OMK Signs Financing Agreement for New Pipe and Steelmaking Complex
06/27/2012 - The United Metallurgical Co. (OMK) has signed a cooperation agreement with Sberbank of Russia for the financing of the construction of an integrated pipe and steelmaking complex in the town of Chusovoy of the Perm Territory.
Anatoly Sedykh, Chairman of OMK’s Board of Directors, and German Gref, Chairman of the Management Board of Sberbank of Russia, signed a cooperation agreement in the scope of XVI Saint Petersburg International Economic Forum.
The agreement seeks to develop business relations between the bank and the company, including long-term and mutually beneficial relations with the company’s subsidiaries in key banking products.
The agreement provides for the financing of construction of an integrated pipe and steelmaking complex in the town of Chusovoy of the Perm Territory. Sberbank will issue an up to 12-year RUB33.8bn loan to implement the project. Additionally, as stated before, OMK has a government guarantee of RUB25bn to secure its obligations under the loan facility. The total cost of the project is about RUB50bn.
The pipe and steelmaking complex will specialize in the production of steel blanks with a capacity of more than 800,000 tonnes per year, seamless oil and gas pipes up to 500,000 tonnes per year, and blanks for springs up to 300,000 tonnes per year.
The new business will offer 2,500 new jobs plus 2,000 additional jobs for the construction period.
Once launched, the complex will increase taxes payable at all levels by more than 8 times in 2016-2026, and reduce harmful emissions by more than 5 times.
Additionally, the signed cooperation agreement provides for potential origination of financing using capital market instruments by the Bank for OMK Group (including by issuing bonds in roubles and in other currencies), syndicated lending, and investment banking services. The agreement serves as a basis to develop relations between the bank and the company and to cement the existing partnership.
“Sberbank of Russia is our long-standing strategic partner. Over the last seven years, Sberbank has issued loans to OMK for about RUB70bn. They are mainly long-term loans for the construction of new and renovation of existing operations. The signing of the new Agreement is a logical continuation of our long-term relations.
The project in Chusovoy is one of the biggest projects in the Russian metallurgy. The construction of the integrated Pipe and Steelmaking Complex within such tight timelines will be secured by the loan of Sberbank and the government guarantee of the Russian Federation,” noted Anatoly Sedykh, Chairman of OMK’s Board of Directors.
