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EBRD signs first Russian shipping loan
Access to international financing for Russian shipping companies should become easier following a US$ 75 million loan agreement signed by the European Bank for Reconstruction and Development (EBRD). The borrower is PRISCO Maritime Limited, a company registered in the Isle of Man, and its special purpose subsidiaries. The borrower is a subsidiary of and is guaranteed by Primorsk Shipping Company A/O, the largest Russian tanker shipping company in the Far East of Russia. The proceeds are to be used to assist in the purchase of four new product tankers from the Kherson shipyard in Ukraine.
The transaction does not involve any export credit finance or guarantees from any state or state organisation. Guy de Selliers, Deputy Vice President of the EBRD, said: "The commercial banks which have participated with us have demonstrated that financing the Russian shipping sector is commercially viable without state guarantees". Alexandr Kirilichev, General Director of Primorsk Shipping Company, said: "The financing will allow us to begin our fleet renewal programme and we hope we have established an important precedent not only for our company but also for other Russian shipowners".
The EBRD loan has been structured under the A/B format, with the Bank funding US$ 45 million (A Loan). Hill Samuel Bank Ltd, which co-arranged the transaction, MeesPierson NV and Nederlandse Scheepshypotheekbank NV (Nedship) are funding the remaining US$ 30 million (B Loan). The loan is structured on a dual flag basis, under which the vessels are registered in the names of Cypriot special purpose companies and, in addition, are registered on the Russian registry, on a "bare-boat" basis, to allow them to fly the Russian flag. Primorsk Shipping Company was advised in this transaction by Investco Management Limited and Theisen Securities Limited.
Primorsk Shipping Company was formed in 1969. Its domestic customers include oil exporters from Russia and importers into the settlements of the northern seaboard of the Russian Far East. The fleet is also engaged in international trades for major oil products and edible oil trading companies. In 1993, 5.2 million tonnes of cargo were carried by the current fleet of 39 tankers, which has an average age of around 12 years. The purchase of new ships is the first step in the company's fleet modernisation programme.
The company currently employs nearly 3,500 people, of whom over 2,500 are employed in shipping-related activities. The new ships will not only help create additional employment but will also facilitate Russian oil exports and, as the ships are being built in Ukraine, facilitate trade between the two countries.
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