A proposed US$ 25 million working capital revolving credit facility to support ISTIL (Ukraine), a joint stock company based in Donetsk, south-eastern Ukraine, and its growing business of cast round billets and special quality bars.
The loan proceeds would be used for the purchase of raw materials, energy supplies, transportation costs and other non-capital goods and services needed for manufacturing billets and special quality bars for export and domestic sales, and for restructuring of the existing loans from Ukrainian banks.
The Bank's financing, a secure source of working capital, would assist ISTIL (Ukraine) in implementing its strategy of producing higher value added products, increasing its export sales and improving profitability. The transition impact would be mainly through providing a clear demonstration effect to other steel producers of the steps that need to be taken to attract such financing. It could also have a demonstration effect for local and foreign banks as a successful working capital facility could encourage them to increase their provision of such financing to strong Ukrainian corporates.
ISTIL (Ukraine) is the only modern mini steel mill in Ukraine based on electric arc furnace and continuous casting machine technology. The company produces high quality steel products, such as rolled and cast round billets and special quality bars that are sold to rolling mills, seamless pipe manufacturers, engineering plants, distributors and stockists worldwide.
US$ 25 million (€28.53 million) working capital revolving credit facility. It will have an A/B structure with two tranches (Tranche 1: US$ 15 million, Tranche 2: US$ 10 million). The Bank proposes to syndicate, on a best efforts basis, up to US$ 10 million of the facility (€11.4 million).
US$ 124.3 million (€142 million), of which EBRD financing represents 20 per cent.
The project was categorised as C/1, requiring an environmental audit, which has been carried out by an independent consultancy firm as part of the market and technical due diligence study. The audit confirmed that the environmental technologies employed at ISTIL (Ukraine) are equivalent to those in Western plants. The new fume collection system meets the highest technology standards.
The audit provided recommendations in the form of an Environmental Action Plan (EAP) to address the identified environmental issues. The EAP includes, besides short-term means, low cost remediation measures: a programme for modernisation to be implemented in future investment projects. Through the implementation of the EAP, ISTIL (Ukraine) will achieve full compliance with Ukrainian environmental, health and safety standards by end of 2002. ISTIL (Ukraine) will be required, through a covenant, to commit itself to the implementation of an EAP.
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Text of the PIP