The EBRD and a syndicate of commercial banks today agreed to lend a joint venture formed by France’s Peugeot-Citroen and Japan’s Mitsubishi Motors Corporation €320 million to fund the production of passenger cars in their Kaluga plant in Russia. The plant will have a capacity of 125,000 vehicles a year once it is fully completed in 2015.
The EBRD will be the lender of record for the full amount and provide a seven-year A loan of EUR 110 million as well as a local currency C loan with an identical maturity for the rouble equivalent of €60 million. A five-year B loan of €150 million has been syndicated to a group of international banks: Unicredit Bank AG, Crédit Industriel et Commercial, Intesa SanPaolo, Raiffeisen Bank International AG and Société Genérale.
Located in Kaluga, 180 km south-west of Moscow, the plant is the first green-field investment in Russia’s automobile sector since a financial and economic crisis hit the country in 2008. It will produce mid-sized passenger cars and SUVs sold under the Peugeot, Citroen and Mitsubishi brand names.
The new project will increase demand for locally manufactured parts in Russia and thus represents a vote of confidence in the future of the country’s automotive industry, said Alain Pilloux, the EBRD’s Managing Director for Industry, Commerce and Agribusiness at a signing ceremony in Paris today.
The EBRD funding will finance the second stage of the Kaluga project which involves building two welding lines, a paint shop and two assembly lines. Local content of the cars produced under the second stage is required to rise to 30 per cent and the project will thus stimulate the growth of the auto parts industry in Russia.
The first phase was funded by the parent companies and involved production on a smaller scale. It relied exclusively on assembling kits imported from France under preferential tariffs and did not incorporate any local content. This initial phase will end when the first models roll off the new assembly lines in the autumn of 2012.
PSA Peugeot Citroen’s stake in the PCMA Rus joint venture is 70 per cent, with Mitsubishi Motors Corporation owning the remaining 30 per cent of the shares of this Russian limited liability company. The EBRD loan is covered by a corporate guarantee from the partners in the joint venture.
PSA is Europe’s second-largest maker of passenger cars and holds a 5.1 per cent share of the global market. Russia is one of the biggest overseas markets for Mitsubishi, which ranks as Japan’s sixth-largest auto-maker and has a 1 per cent share of the global market.