Proposed portage equity to co-finance the buyout of minority shareholders in VIZ-Stahl by its majority shareholder, Duferco, an international steel group and the only foreign investor in the Russian metallurgical sector. The EBRD is a 7.34 per cent shareholder in VIZ-Stahl via its previous investment in 2000. The EBRD will support a committed foreign investor to buy-out minority shareholders in VIZ-Stahl who have expressed their desire to sell. Co-financing of the buy-out by Duferco would facilitate full commercial development of VIZ-Stahl, including the provision of adequate resources for additional capital expenditure and working capital.
The transition impact potential will largely derive from supporting/broadening the transition impact of the previous project (i.e. demonstrating successful restructuring and setting standards in corporate governance to the local industry).
The Bank will further support a foreign shareholder committed to strengthening VIZ-Stahl's organisational and financial transparency and improving the corporate governance standards. In addition, it enables Duferco to commit its resources to the modernisation programme rather than for buying-out the minority shareholders.
The investee company is one of only 15 producers world-wide of grain oriented steel used for transformers in power generation and distribution. The company is controlled and managed by Duferco, a major steel trader as well as an important European producer with a clear strategic view on the steel sector and proven ability in acquiring and turning around steel plants.
The EBRD will provide US$ 14 million ( 15.6 million) in portage equity with a put option to Duferco.
US$ 21 million ( 23.3 million).
This operation has been screened C/1. This is a follow-up project. As part of the Bank’s original investment into VIZ-Stahl, an environmental audit was conducted on the Company and an Environmental Action Plan was developed and is being implemented. According to the environmental reports, which the Company provides annually to the Bank, VIZ-Stahl’s operations are in line with environmental standards of the European Union. An Environment team member will visit the site prior to the Board to ensure the progress of implementation of the Environmental Action Plan.
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Text of the PIP