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Largest shipping company in Russian Far East receives EBRD loan
The acquisition of three new container vessels will be partially financed with the proceeds of a US$ 32.7 million loan agreement signed between a subsidiary of the Far Eastern Shipping Company A/O (FESCO), Russia's largest shipping company in the region, and the European Bank for Reconstruction and Development (EBRD).
Ron Freeman, First Vice President of the EBRD, said: "Purchasing the three vessels improves FESCO's competitiveness. The EBRD is pleased to be able to assist FESCO in its fleet restructuring and modernisation efforts. Half of the loan has been syndicated to one bank, Christiania Bank of Norway, which has long experience in the shipping sector. Their participation has been very important to this project."
Captain Victor Miskov, President of FESCO, said: "This financing will allow us to accelerate our fleet renewal programme, aimed at maintaining our position in the international trade in the Pacific. We consider the development of our container activities as strategic not only for the development of FESCO but also for the further development of Russian trade with the economies of Australasia and North America."
Per Aage Jacobsen, First Vice President of Christiania Bank, said: "The financing is based on FESCO's corporate cashflow and the additionality EBRD brings to the transaction in securing the commercial viability of dual flag assets."
The loan is structured on a dual flag basis, under which the vessels are registered both in the name of a FESCO subsidiary, based in Cyprus, and on the Russian registry, on a "bare-boat" basis, to allow them to fly the Russian flag. The loan is guaranteed by FESCO.
The vessels are being constructed at the Szczecin shipyard in Poland and will enter FESCO's existing container line services in the Pacific.
Founded in 1880, FESCO owns 165 vessels and specialises in dry-cargo and passenger transportation. It operates in the Pacific and Russia's Far Eastern seaboard from the port cities of Vladivostok, Vostochny and Nakhodka. The company is also engaged in international cross-trade activities. It is playing a key role in the development of trade from the Russian Far East, especially through its liner operations to many ports of the Pacific Rim. With nearly 15,000 employees, FESCO is one of the largest employers and taxpayers in the region.
This is the second EBRD loan to the Russian shipping sector.
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