The European Bank for Reconstruction and Development (EBRD) has arranged a US$ 155 million financing package for a major Georgian manufacturer, Rustavi Azot. The company is a producer of nitrogen-based fertilisers and is the largest industrial enterprise in Georgia, with 2,200 employees and an annual production capacity of up to 500,000 tonnes of ammonium nitrate and 220,000 tonnes of ammonia.
The US$ 155 million facility will consist of a US$ 125 million EBRD-syndicated loan and a US$ 30 million parallel loan extended by the Bank of Georgia. The EBRD loan itself will be split amongst three lenders, with US$ 50 million from the EBRD’s own account, US$ 25 million to be syndicated to the Dutch development bank FMO and US$50 million from East-West United Bank, a Luxembourg-based bank.
The Georgian Partnership Fund also plans to become a shareholder of Rustavi Azot at the time of the EBRD loan disbursement.
The funds will be used to upgrade and modernise the ammonia production line, using energy-efficient measures that will decrease energy consumption by 30 per cent, and for debt restructuring. The refurbished plant will comply with higher environmental standards and improve competitiveness.
Rustavi Azot is an export-oriented company and the sole producer of nitrogen-based fertilisers in the south Caucasus. It is the primary supplier of ammonium nitrate, used in agriculture to improve crop yields, to customers in Georgia and the Caucasus region.
The investment will also boost regional trade as, thanks to Georgia’s geographical location, Rustavi Azot can supply customers worldwide. Supporting the development of private local companies is one of the strategic priorities of the EBRD and this investment will also set higher standards of corporate governance and business conduct.
At the signing in Tbilisi, Bruno Balvanera, EBRD Director for Caucasus, Moldova and Belarus, said: “We are excited to support this new project alongside other partners. This is an important investment for Georgia’s chemical sector and will significantly increase export capacities. It will provide Rustavi Azot with a stable financing platform and funds for energy efficiency measures and will also contribute to greater productivity and setting higher environmental standards.”
Roman Pipia, the founder of Loyal Capital Group S.A. and owner of Rustavi Azot, added: “We truly appreciate the support of the EBRD and other financing partners. This transaction is a good opportunity to understand the role the EBRD plays in Georgia and the region as a financier and arranger of complex financing packages. The funds will help us increase our production capacity as well as improve our energy efficiency, which will make a big impact on the operating costs of the company.”
The EBRD is a leading institutional investor in Georgia. Since the start of its operations in the country, the Bank has invested over €2.73 billion in 195 projects in the financial, corporate, infrastructure and energy sectors, with 91 per cent of these investments in the private sector.
The EBRD’s strategic plan for the countries where it invests, including Georgia, for the period 2016-18 has three priorities: strengthening economic resilience, addressing global challenges and supporting regional integration.
FMO is the Dutch development bank. As a leading impact investor FMO supports sustainable private sector growth in developing countries and emerging markets by investing in ambitious projects and entrepreneurs. FMO believes that a strong private sector leads to economic and social development, and has a 45-year proven track record of empowering people to employ their skills and improve their quality of life. FMO focuses on three sectors that have high development impact: financial institutions, energy, and agribusiness, food and water. With a committed portfolio of €9.3 billion spanning over 85 countries, FMO is one of the larger bilateral private sector developments banks globally. For more information please visit www.fmo.nl.
About Loyal Capital Group
Loyal Capital Group S.A. (www.loyalcapital.com) is a Luxembourg-based company founded by renowned Georgian businessman Mr. Roman Pipia. As well as the fertiliser production plant Rustavi Azot, LCG’s activities include international real estate development projects and private equity investments.
East-West United Bank S.A. (www.ewub.lu ) is a Luxembourg-based bank with Russian capital offering customised services in Corporate, Private Banking and Wealth Management to corporate and private clients. Acting as a business partner dedicated to building and protecting clients’ interests and providing them with tailor-made financial solutions, the bank has been successfully operating for over 40 years. EWUB is a leading bank with comprehensive knowledge of Luxembourg, Russian and CIS countries’ legislation and business customs combined with an individual approach to each client.