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EBRD provides loan to Czech metallurgical industry
Under an agreement signed yesterday in Plzen, Czech Republic, the European Bank for Reconstruction and Development (EBRD) will provide a DM 32.8 million (ECU 17.3 million) loan to help finance a new investment programme for Skoda Kovarny s.r.o., a manufacturer of forgings and a wholly-owned subsidiary of Skoda a.s. Komercni Banka is expected to provide the remainder of the financing under a parallel loan structure.
At the signing, Jiri Huebner, Director of the EBRD's Czech Team, said: "This project represents the EBRD's first involvement in the restructuring of one of the largest Czech conglomerates and its successful completion may act as an example for the development of other projects within the Skoda Plzen Group or other large Czech industrial groups. It also demonstrates that Western involvement is not a precondition to EBRD financing and that Czech-owned and Czech-managed companies with strong commercial prospects can attract long-term financing in support of their projects".
Also attending the signing were Mr Lubomir Soudek, the Chairman of Skoda Koncern Plzen a.s., and Mr Vladimir Rada, President of Skoda Kovarny.
The investment programme will upgrade Skoda's capital asset base by offering integrated machining capability for heavy free forged products. The investment will provide for the purchase of equipment to enable the company to produce finish machined free forgins mainly for export markets.
The Skoda group of companies, now organised under Skoda a.s. as the holding company, was founded in 1859 and is the largest mechanical engineering and metallurgical conglomerate in the Czech Republic. Following the restructuring of the group along operating lines in April 1993, Skoda Kovarny s.r.o. became one of 36 separate legal entities, operating independently of the rest of the group. Further restructuring followed and Skoda Kovarny, which has a long-established record for the production of quality forged products such as rotor shafts, mill rolls, gear wheels, turbine blades and automotive crankshafts, will now focus production on the niche market for finish machined heavy crankshafts used in large diesel engines in the power generation and shipbuilding industries.
Note to the Editors: Forging is the process of producing a metal object by heating it to extreme temperatures, then shaping it. Free forging is the process of shaping the metal without a die or template.
The investment will finance the purchase of equipment to produce a product of a more refined quality than would otherwise be possible. The process is lengthy, complex and requires considerable skills. The company, whose specialty is in producing the largest forged products, will be one of only three worldwide which can produce these products from the forging state through the finishing stage.
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