EBRD raises $150 million for Russian oil field services equipment manufacturer Borets

By Richard Wallis

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The EBRD has together with a group of international banks and one local Russian bank raised $150 million in long and medium-term debt to help Borets, the leading Russian manufacturer of oil services equipment, restructure its balance sheet, modernise its production facilities as well as provide working capital for growth.

Two international commercial banks, ING Bank N.V. and Banque SCS Alliance, participated in the syndication of the $40-million B loan, which raised significant interest from the market. In addition, Alef Bank, a local Russian bank was invited as a parallel lender for an additional $10 million.

The EBRD is the lender of record for $140 million and has taken a seven-year A loan of $100 million onto its books. The B loan has a three-year maturity and bears a margin of five percent over 6-month LIBOR.

The transaction will provide important support for a Russian manufacturing and service company operating in a key industry at a time of global uncertainty. The refinancing portion of the EBRD loan will enable Borets to extend the maturity of its existing debt, thus freeing resources to sustain its production growth.

Borets is the world’s largest manufacturer of electrical submersible pumps (ESP) and Russia’s leading oil field equipment and services company. It employs about 9,000 staff worldwide, of which 8,000 work in Borets’s regional manufacturing and service facilities 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, of which ESP is one of the technologies available, has played a crucial role in the redevelopment of existing Russian oilfields, primarily in Western Siberia. This has enabled Russian oil production to rise by 60 percent since 1997 to reach 10 million barrels per day.

Borets is the first ESP manufacturer to have developed a commercially viable and operational reliable Permanent Magnet Motor (PMM).

The project will expand the production of this new energy-efficient engine, which consumes a third less power than the conventional analogues used in ESP systems. This will support the global distribution of innovative technologies in the oilfield services sector.

OOO PK Borets, the borrower, accounts for a third of the Russian ESP market. The Borets group is also one of the leading ESP players internationally with a share of over 15 percent of the global market and employs nearly 9,000 staff worldwide.

Weatherford International (NYSE symbol WFT:NYQ), a leading global provider of equipment and services to the oil and gas industries, holds a 38.5 percent stake in the Borets group. The remaining shares are privately held.

In 2008, Borets acquired Weatherford International’s ESP business, later renamed Borets-Weatherford. Product harmonisation between Borets and Borets-Weatherford is one of the programmes due to benefit from the EBRD loan.

This will contribute to the expansion and upgrade of Borets’s production assets in Russia, as well as the global commercialisation of new products.

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