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EBRD lends $3 million to Georgia’s Nola
Loan to construction firm draws on co-finance facility with TBC Bank
The European Bank for Reconstruction and Development is participating in a $3
million loan to Nola Ltd, a Georgian construction company, through its
existing medium-sized co-financing facility with Georgia’s TBC Bank.
Nola, set up in 1998 by two brothers, Kakhaber and Besarion Khuchua, is a
major player in Georgia’s fast-expanding construction sector, which is growing
at about 30 per cent a year. Leaving aside the business generated by
construction of the international Baku-Tbilisi-Ceyhan regional energy
pipelines through Georgia, Nola accounts for 11.3 per cent of the Georgian
market.
The EBRD will finance a $3 million loan organised by TBC bank through a
participation facility of $1.5 million (non-recourse portion) and a further
$1.5 million loan to TBC bank for on-lending to the company (full recourse
portion). The loan, which will finance the purchase of land and equipment as
well as permanent working capital, reflects the EBRD’s experience of, and
confidence in, TBC Bank’s lending approaches, said Nikolay Hadjiysky, head of
the EBRD’s Tbilisi office, at the signing.
The EBRD’s co-financing facility with TBC was signed in June 2005 to ease
access to medium and long-term funding for Georgian enterprises. As well as
providing long-term funds to a leading local bank for on-lending, it enables
the EBRD to participate in financing of projects– taking direct risk on
Georgian enterprises by lending money alongside TBC. This allows borrowers to
receive larger loans than local banks have the capacity to provide on their
own.
The medium-sized co-financing facility is one of the instruments available
under the EBRD’s Early Transition Countries (ETC) initiative, launched in
2004, which aims to stimulate market activity in the Bank’s seven
lowest-income countries of operation by offering more flexible lending
instruments so as to finance more and smaller projects, mobilise more
investment, and encourage economic reform. This finance instrument is also
available in the Western Balkans.
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