OREANDA-NEWS. April 30, 2010. The Baku-based ADB representative office reports that this project will be financed within the framework of syndicated financing with the European Bank for Reconstruction & Development.

“Although financing for private business will be direct (without governmental guarantees), we expect from the government a statement about lack of objections for our participation in the project. Receipt of such a statement will allow submission of the project to the Bank’s Board of Directors by the end of this May. ADB is ready to extend a 20 million euro loan for the project, and rates on it will be a little higher than crediting under governmental guarantees,” the ADB office said.

Earlier there were finished surveys of social, economic and environmental consequences of the project when preparing to endorse a loan for the project.

Earlier the EBRD disbursed a loan of EUR 120 million (USD175 млн.) for the GC project.

Since 2006 the EBRD has been one of the GC shareholders with an equity stake of 10%. After completion of the work, the enterprise will be upgraded by 70%.

Since 2011 manufacture of clinker at GC will increase by 40% that will allow supply of large volume of high-quality cement products to construction sector of Azerbaijan.

In May 2009 the EBRD Board of Directors considered and endorsed organization of financing of EUR 170 million for this project worth EUR 330 million.

The EUR 170 million structured corporate loan with a senior A/B loan of EUR 150 million, of which approximately 50% will be offered to commercial banks (B lenders), and a EUR 20 million subordinated C loan for EBRD’s account. An additional EUR 30 million loan subordinated to all bank debt is to be provided by Holcim – the main shareholder of GC.

But overall cost of the project was reduced to EUR 300 million.

As a whole, the credit facility on this project is quite difficult. Part of finances for the loan will be directed by GC on the basis of own earnings and another part by Holcim.

The EBRD provides a larger portion of the loan for GC. Its loan is extended by two tranches – for 5 and 6 years.

The GC upgrade and expansion will allow increasing manufacture, saving consumption of power by 50%, and broadening annual cement production from 1.3 million tons up to 1.7 million tons without clinker import.

GC is the largest cement and only clinker producer in Azerbaijan. Holcim, a leading global supplier of concrete and cement based in Switzerland, acquired a controlling stake in Garadagh privatisation in 1999. Today it owns 69.4% of the company’s share capital and provides managerial, technical and commercial resources.

Construction of new kiln #6 for dry cement production method will allow replacing four existing stoves, save energy and reduce atmospheric emission.

GC is owned by Switzerland’s Holcim (69.4%), Azerbaijani government in the person of the Azerbaijan Investment Company (10%) and European Bank of Reconstruction and Development (10.6%). Garadagh Cement started operating in 1999. For construction of a new production line Holcim allocated EUR 300 million for project budget.