EBRD to lend Russia’s Sistema holding up to €120 million

By Richard Wallis

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An EBRD medium-term loan of up to €120 million to Russia’s largest privately-owned conglomerate, JSFC Sistema will increase the group’s liquidity and ability to support its high-tech sector through the current financial crisis – with its Sitronics subsidiary, the leading Russian electronics and technology company, as the main beneficiary.

The three-year unsecured loan, which may be extended for an additional year, is part of the Bank’s anti-crisis response. At a time when traditional sources of refinancing have significantly shrunk, the EBRD funding will provide vital liquidity for the group’s efforts to develop a knowledge economy in Russia.

Separately, the EBRD has sold its minority stake in Sitronics to Sistema under an earlier contractual arrangement. The EBRD bought its Sitronics stake in September 2006 for $80 million.

The EBRD’s new loan of up to €120 million underscores the Bank’s commitment to a long-standing client and its high-tech subsidiary despite difficult market conditions, said the EBRD’s Business Group Director for Russia, Alain Pilloux.

Although the EBRD is no longer a shareholder in Sitronics, this deal highlights our growing support for the company in completing its priority investments, as well as the Bank’s continued involvement in its future, Mr. Pilloux added.

Prior to this loan, the EBRD recently raised €218 million for another part of the Sistema group. In addition to lending €115 million on its own account, the EBRD last month attracted €103 million from commercial banks for MTS, the largest mobile operator in Russia, as well as central and eastern Europe.

Sistema and Sitronics are both listed companies. Sistema made an initial public offering (IPO) of Global Depository Receipts in 2005 in London and Sitronics followed with a listing on the London Stock Exchange in 2007.

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