JSC “Kazakhstan Temir Zholy” balance sheet restructuring loan

Location:

Kazakhstan

Project number:

47598

Business sector:

Transport

Notice type:

Public

Environmental category:

C

Target board date:

22 Jul 2015

Status:

Repaying

PSD disclosed:

10 Apr 2015

Translated version of this PSD: Russian

Project description and objectives

The EBRD is considering
providing a senior loan of up to KZT 37.2 billion (EUR 185 million equivalent)
to restructure balance sheet of JSC National Company “Kazakhstan Temir Zholy”, Kazakhstan’s
National Railways Company (KTZ). Funding will be used to repay maturing in May
2016 Eurobonds. The loan will be provided in local currency, assisting KTZ with
creating natural currency hedge, aligning currency of its credit portfolio and
revenue streams

Transition impact

Transition impact is expected to be derived from the following:
 

Frameworks for markets

The Bank will make use of this opportunity to take stock of the reform progress and agree on the revised reform agenda and timetable
 

Demonstration of Successful Restructuring –Financial Restructuring

This will include (i) assisting with balance sheet restructuring to make it more sustainable; (ii) implementation of the new tariff methodology and (iii) implementation of Public Service Obligations services for railway passenger transportation 
 

Demonstration of Successful Restructuring –Institutional Restructuring

The Project will focus of assisting KTZ and the Government with implementation of proposed corporatisation/privatisation of freight operations in a timely manner.

The expected transition impact rating is ‘strong to good’.

The client

KTZ (100 per cent owned by Samruk-Kazyna) is a vertically integrated company that
manages railway infrastructure and operates freight and passenger train services. KTZ plays a key role in the Kazakh national transport sector with leading position in freight and passenger traffic.

EBRD finance

Senior loan of up to Tenge 37.2 billion (EUR 185 million equivalent).

Total project cost

KZT 65 billion (EUR 324 million equivalent)

Environmental impact

Categorised C (2014 ESP). This fifth EBRD project with KTZ provides general corporate finance for restructuring of KTZ’s current debt liabilities and will not
involve any capex investments. Therefore, the project will have no adverse future
environmental and social impacts. The environmental and social due diligence (ESDD) will build on the ESDD undertaken for the previous projects and review the implementation of corporate E&S management systems and the existing ESAPs by KTZ and its subsidiaries such as KTT and KTZE.
 
The review will focus on the progress in finalising and implementation of the KTZ retrenchment plan, as well as specific plans for rolling out ESAP commitments to the subsidiary level operations on the ground. ESDD will also review the status of the expansion plans for KTZ/KTZE operations into logistics business under bond financing, clarification of the extent of implementation of the previously agreed E&S Procedures for new investments. The Bank is in the process of providing a TC for a Corporate Development and Environmental Capacity Building Programme for KTZE to assist KTZE in capacity building to assess and manage environmental and social risks in line with EBRD’s Performance Requirements (PRs), as well as strengthen monitoring and supervision of KTZ and KTZE’s performance on E&S matters.
 
The Bank will continue closely monitoring performance of KTZ and its subsidiaries and implementation of the ESAPs through reviewing annual reports provided by the Company and carrying out monitoring visits, when deemed necessary. This section will be updated upon completion of the ESDD.
 

Business opportunities

For business opportunities or procurement, contact the client company.

For state-sector projects, visit EBRD Procurement: Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

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