Vneshekonombank, Eurasia Development Bank and NOMOS-BANK provide USD 560 million finance to Tikhvin Railway Car Building Plant
The State Corporation “The Bank for Development and Foreign Economic Activity (Vnesheconombank)”, the Eurasia Development Bank (EADB), and ÎÀÎ “‘NOMOS-BANK’” have signed a credit agreement with ZAO “Tikhvin Railway Car Building Plant” (“TBSZ”).
In accordance with this document, the banks will provide USD 560 million to TBSZ to be used for launching high-tech manufacturing capacity on the basis of a new railway car building plant in Leningrad Region. Vnesheconombank and EADB will extend to TBSZ USD 430 million (215 million each) in the form of a non-revolving credit line. NOMOS-BANK provides Euro 89.2 million in the form of non-revolving credit line and USD 32.2 million in the form of guarantees. The funding is intended for constructing the enterprise, purchasing equipment, and launching the plant.
“This project is a good example of successful implementation of state — private partnership in the infrastructure industry, — notes NOMOS-BANK’s President Dmitriy Sokolov.
Co-operation with development banks is a good opportunity to make its own contribution to strengthening Russia’s transportation system”.
In order to comply with the project’s schedule, NOMOS-BANK began financing before signing the agreement with the development banks. In particular, for the purpose of acquiring the equipment, NOMOS-BANK opened 2 letters of credit for a total amount of 36.5 million Euro
In addition to providing finance, NOMOS-BANK also acts as the project’s payment agent, which will process all expense transactions and accumulate revenue from the sale of products after the launch of the plant.
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“Tikhvin Railway Car Building Plant” (“TBSZ”) is expected to reach full capacity by the 4th quarter of 2011. The enterprise will produce annually 10 thousand railway cars of four types that enjoy highest demand on the market, including railway cars of a new generation. Key drivers of demand for the new plant’s products include renovation of worn-out fleet of universal railway cars of the Russian Railway System (RZhD), expansion of the existing fleet due to higher turnover of goods, as well as increasing railway transportation needs in all countries of the Commonwealth of Independent States (CIS), which have same railway track standard as Russia. In accordance with experts’ estimates made public during a meeting of the Council on Railway Transport of the States — Participants in the CIS last November, the demand of railway systems in Russia and other countries of the Commonwealth reaches 100 thousand railway cars annually.