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European Bank signs loan agreement for first float glass plant in Poland
The European Bank for Reconstruction and Development will take a 15% holding in a joint venture to privatise Poland's largest sheet glass manufacturer and to construct the country's first float glass plant. The shareholders' agreement of Pilkington Sandoglass Sp. z o.o. was signed in Warsaw yesterday.
The principal partner in the new company is Pilkington of the UK, who will subscribe 40% of the equity. The State Treasury of Poland will hold around 30% of the equity in return for contributing the existing sheet glass plant at Sandomierz. The International Finance Corporation (IFC) will hold 15% and the European Bank for Reconstruction and Development (the European Bank) will also take an initial holding of 15% while negotiations with foreign equity investors proceed.
The float glass plant will be constructed adjacent to the sheet glass operations of Huta Szkla Okiennego Sandomierz. Once completed, the plant will produce 500 metric tonnes of float glass per day with a total design capacity of 140,000 tonnes a year. This compares with the production capacity of 106,000 tonnes a year of the existing plant. It will replace old technology with the world's most advanced flat glass production system, privatise Poland's largest glass manufacturer, develop local management and improve environmental compliance.
Pilkington, the inventor of the float glass process, is the world's leading producer of flat and safety glass. The British company will be fully involved in all aspects of the project's design, implementation and operations.
The project will be one of Poland's largest privatisations, achieved with the close support of international institutions. The IFC has the mandate to mobilise financing from commercial banks through a syndicated loan and the European Bank has made an additional contingent equity commitment to take up shares for cash if the valuation of the Treasury contribution amounts to less than 30% of the equity.
The financing plan for the $171.5 million project comprises equity totalling $64.2 million and project financed debt of $107.3 million. The debt will be provided by the IFC with $33.3 million for its own account and a syndicated loan of $24.5 million; by the European Bank with a loan of $34 million; and by the Polish Development Bank with a loan of $15.5 million, part of which is to be syndicated among Polish banks.
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