OREANDA-NEWS. April 1, 2010. On 30 March 2010 EuroChem signed a USD 261m, 10-year ECA-backed loan facility for financing the ongoing construction of the cage shaft at its Gremyachinskoe potash deposit by South Africa-based Shaft Sinkers (Pty) Limited.  The syndicated loan was oversubscribed, and benefits from a comprehensive cover of both political and commercial risks by the official South African Export Credit Agency (ECA), ECIC (Export Credit Insurance Corporation of South Africa Limited).  The interest rate is 2.5% per annum over LIBOR.

Barclays Capital acted as the advisor and Bookrunner and with its affiliate Absa Capital, a division of Absa Bank Limited, as the coordinating mandated lead arrangers.  Mandated lead arrangers are Credit Agricole Corporate and Investment Bank, South Africa Branch, Citibank, N.A., South Africa Branch, Industrial Development Corporation of South Africa Limited and The Standard Bank of South Africa Limited, acting through its Corporate and Investment Banking Division.  Credit Suisse AG have also participated in the financing.  The ECIC Agent for this transaction is Absa Capital.  Barclays Bank Russia has been appointed as the passport bank.

EuroChem CFO Andrey Ilyin said: “We are pleased to announce the signing of this deal as it is both the first ECIC loan granted to a Russian company, and the first ECA-backed facility for EuroChem. EuroChem has again demonstrated its commitment to its potash projects.  Our contractors, Shaft Sinkers, began working with EuroChem in 2007, and we are pleased to have secured this financing for the remainder of our cooperation on this part of the project.”

EuroChem Head of Corporate Finance Alexander Gavrilov said: “This ECA facility is an optimal way for EuroChem to raise financing.  It provides long term liquidity while maintaining acceptable debt ratios: our debt will only increase as we draw down funds to pay Shaft Sinkers, so EuroChem will not incur costs of carrying excess cash.  While we have successfully secured long-term financing, it will not immediately lead to an increase in our debt levels.”

Head of Barclays Capital Capex Financing Solution Team Gabriel Buck said: "We are pleased to deliver for EuroChem a long term, competitive ECIC facility that includes a number of market firsts.  This is EuroChem's inaugural potash project and, importantly, it allows the company flexibility in sourcing goods and services.  Our relationship with EuroChem spans the full spectrum of financing and risk management and we are particularly pleased to have acted as their advisors on this strategically important project and to have closed their first ECA transaction.”

Head of Global Loans at Absa Capital, Jonathan de La Pasture said: "Working with our colleagues in London we were able to close this transaction oversubscribed in difficult market conditions.  Using our knowledge of the market, and in particular ECIC, we were able to bring together a strong group of South African and International banks."

ECIC GM: Operations, Mr Emile Matthee said: “ECIC is pleased to support Shaft Sinkers (Pty) Ltd in the Mining Services Industry and, for this purpose, has partnered with a syndicate of banks to achieve this benchmark result. As the leading Export Credit Agency in Sub Sahara Africa, ECIC is paving the way for South African Exporters into foreign jurisdictions, this being the first ECIC supported transaction in the Russian Federation. ECIC strives to fulfill its mandate to promote, encourage and facilitate South African exports internationally."