OREANDA-NEWS. On April 07, 2008 as a result of strong demand, a long-term unsecured energy efficiency loan to Russia’s leading steelmarker Severstal by the European Bank for Reconstruction and Development has been increased in size to ?600 million from the originally planned ?500 million, only three months after it was launched on the market, reported the press-centre of EBRD.

The highly successful syndication of the loan’s B portion was heavily oversubscribed, allowing the amount sold to 18 commercial banks to be increased to ?450 million from the original target of ?350 million. The EBRD itself last December committed to a separate ?150 million A loan with a 10-year maturity and this portion remains unchanged. The EBRD also remains the lender of record for the full ?600 million amount.

This is an impressive achievement in the current market and the success of this deal sends a clear signal that despite tighter credit conditions, strong support remains available for bluechip Russian borrowers with a strong record and a clear business strategy, said Lorenz Jorgensen, the EBRD’s Director of Commercial Co-Financing.

CALYON, ING Bank N.V. and Raiffeisen Zentralbank Oesterreich AG, acting as the syndicated loan’s bookrunners, originally committed to underwrite ?150 million of the B loan, which has a seven-year maturity. This commitment was later cut to ?120 million to accommodate demand from other banks.

The first half of this transaction was signed in Moscow last December when it consisted of a ?150 million A loan from the EBRD and a matching ?150 million B loan from the three underwriters. Efforts to raise an extra ?200 million began immediately afterwards.

It is this second round of syndication which has just been completed, raising ?300 million, which is ?100 million more than the client had originally asked for. The participation agreement covering this was signed last Friday. The pricing of the B loan has remained unchanged since the December signing and stands at 140 basis points over Euriibor for the first five years, rising to 160 basis points over Euriibor for the sixth and seventh years.

Severstal agreed to increase its borrowing in view of the higher than planned cost of the energy efficiency investment programme it intends to implement with the help of the EBRD’s funding. The EBRD loan, the largest energy efficiency transaction undertaken in Russia, will help the country’s leading steelmaker to reduce its annual primary energy consumption by 5-10 percent. Severstal is one of Russia’s biggest energy consumers.

The following commercial banks bought into the B loan:

Calyon, ING Bank NV and Raiffeisen Zentralbank Oesterreich AG (Bookrunners -- ?40 million each)

Banco Bilbao Vizcaya Argentaria S.A., The Bank of Tokyo-Mitsubishi UFJ, Ltd., Intesa Sanpaolo SpA and Nordea AB (Mandated Lead Arrangers -- ?35 million each)

Bayerische Landesbank Munich, Caja de Ahorros y Monte de Piedad de Madrid, Erste Bank der Oesterreichischen Sparkassen AG and Fortis Bank SA/NV (Arrangers -- ?25 million each)

Caixa Geral de Depositos S.A., France Branch, Landesbank Baden-Wurttemberg, Mega International Commercial Bank Co. Ltd. and Taiwan Cooperative Bank, Offshore Banking Branch (Co-arrangers -- ?15 million each)

Bank of Taiwan, London Branch, Hua Nan Commercial Bank Ltd., London Branch, and Land Bank of Taiwan, Offshore Banking Branch (Lead Managers -- ?10 million each).