OREANDA-NEWS. November 27, 2007. Volkswagen’s first Russian car plant, due to start production this week, has benefited from the market’s largest rouble syndication to date through a record credit facility arranged by the EBRD, raising over 26 billion roubles (equivalent of ?750 million), reported the press-centre of EBRD.

The loan is the largest in the EBRD’s history and the highly successful syndication was oversubscribed despite tight market conditions.

The EBRD’s total commitments to the Russian auto sector have with this latest transaction reached over ?1,2 billion as part of a strategy to support the revival of key industrial sectors and help diversify the Russian economy. In December 2006, the EBRD acquired a minority stake in Volkswagen’s Russian subsidiary, OOO Volkswagen Rus.

The EBRD remains the lender of record for the full 26,2 billion roubles under an A/B loan structure, syndicating nearly 21 billion roubles to 11 banks under an 8-year facility priced at 55 basis points over MosPrime. The EBRD has kept 5,2 billion roubles on its own books as the A portion of the loan, which has a 10-year maturity.

The three lead arrangers were CALYON/CALYON Rusbank, UNICREDIT Markets & Investment Banking and ING Wholesale Banking. The five arrangers were ABN Amro Bank NV Niederlassung Deutschland, Skandinaviska Enskilda Banken AB, Sumitomo Mitsui Finance Dublin Limited, Commerzbank AG and Nordea. Co-arrangers of the facility were DZ Bank, Fortis Bank and Landesbank Baden-Wuerttemberg.

The Volkswagen project represents the third EBRD investment in a greenfield car production plant in Russia in six years. The two earlier ones were GM-AvtoVaz in Togliatti and Toyota in St. Petersburg.

The new plant will eventually create thousands of jobs in the region and will involve large-scale technology and skills transfers. This will help stimulate competition in the Russian auto sector as well both draw foreign parts suppliers to Russia and provide a new but demanding market for their domestic counterparts.

Alain Pilloux, the EBRD’s director-general for Russia, will represent the Bank at the November 28 ceremony.

The EBRD facility will finance the construction of a greenfield plant near the city of Kaluga for the production of VW and Skoda models with a new assembly line, body shop and paint shop which will make Volkswagen one of the largest foreign direct investors outside Russia’s oil and gas sector.