EBRD backs Russian oil-field services company’s Eurobond

By Richard Wallis

The EBRD, acting as an anchor investor, has taken 19 percent of a five-year USD 420 million bond issued by Borets International Limited, an existing client of the Bank and the leading Russian manufacturer of specialised pumps and systems used in wells for the artificial lifting of oil.

The Bank’s USD 80 million participation in this bond is part of a broader financing package for Borets under which the EBRD is in addition intending to invest up to USD 30 million in the company’s equity. Borets is using part of the proceeds of the bond issue to repay its lenders, including the EBRD.

In 2009, the EBRD raised USD 150 million for this Russian oil field services equipment manufacturer’s modernization and refinancing programmes. The funding consisted of a seven-year A loan of USD 100 million and a three-year syndicated B loan covering the remaining USD 50 million.

The equity investment, when completed, will give the EBRD the right to nominate an independent non-executive board member who will focus on strengthening the company’s corporate governance. The EBRD will also have right to veto certain decisions.

The new EBRD financing will be used to fund Borets’ capital expenditure in Russia, including the construction of a casting plant at Stary Oskol to be fitted with energy efficient equipment.

Borets is one of the world’s largest manufacturers of electrical submersible pumps (ESP) and Russia’s leading company in the field, providing post-sales maintenance services to its clients. It employs 9,000 staff worldwide, of which 8,000 work in Russia.

ESP systems provide an efficient, cost-effective and more environmentally-friendly technology to boost well production when there is insufficient reservoir pressure to pump oil at an economically viable rate.

Artificial lift has played a crucial role in boosting Russia’s production rates through the redevelopment of existing oil fields with the aid of technologies such as ESP.