ISTIL Restructuring

complete

The project objective is to provide additional capital for investment and operations and to broaden the client’s access to commercial lenders and to restructure the existing exposure. The revolving loan will be used for working capital needs for the increased production volume The term loan is to finance capital investments needed to improve cost and energy efficiency and quality control for the higher value added products and for restructuring the existing debt. One of the key sources of transition impact potential associated with this Project is the demonstration effect associated with first expected sale of carbon credits by an industrial steel company in Ukraine. By supporting this Project, the Bank will play a key role in helping the government in developing the market frameworks and institutions that would allow the Company to monetise the value of its emission trading reductions. The potential transition impact of this project is further enhanced by setting standards of business and environmental conduct. The Company will develop and implement a medium-term environmental action plan (EAP) to fully meet EU environmental standards. Mini Steel Mill ISTIL (Ukraine), a closed joint stock company, is the only stand alone modern mini steel mill in Ukraine based on electric arc furnace (EAF) and continuous casting technology. The company produces steel products, such as rolled and cast billets and special quality bars that are sold to rolling mills, seamless pipe manufacturers, engineering plants, distributors and stockists worldwide. ISTIL (Ukraine) has been an existing Bank client since the first working capital facility provided in 2001. EBRD proposes a USD 85 million facility which is planned to be syndicated to commercial banks. The facility will consist of a USD 40 million working capital revolving loan and a USD 45 million term loan. USD 228 million. The project is categorised as B/1 requiring an environmental audit and analysis. This will provide recommendations in form of an Environmental Action Plan (EAP) to bring the plant into compliance with EU Integrated Pollution Prevention and Control standards for environment, health and safety in steel making. The adoption and implementation of the EAP will be covenanted in the Loan Agreement and the Bank will monitor the progress of the implementation. The planned investment will have significant environmental benefits using new technology and replacing old inefficient and polluting equipment. The investment programme will also enable substantial energy efficiency gains to be found and an opportunity for Green House Gases (GHG) emission reductions. The expected GHG reduction until 2012 is estimated at 300,000 tonne of CO2, which is equal to the annual emissions from 120,000 average EU households. None. Yuriy Ryzhenkov CFO, + 38 062 385 0440 Email: ryzhenkov@istil.com.ua