Press Releases
print

IFC and EBRD to Finance TAV’s Airport Operations in Georgia


In Washington, D.C.
Ann Pasco

Phone: +(202) 473-9167

Email:
apasco@ifc.org

In Tbilisi

Tamar Razmadze

Phone: + (995) 32913 096

Email:
trazmadze@ifc.org


Istanbul, May 17, 2006—The International Finance Corporation, the private sector arm of the World Bank Group, and the European Bank for Reconstruction and Development have agreed to provide parallel loan financing of $27 million each to TAV Urban Georgia LLC, a subsidiary of TAV Airports Holding. The signing ceremony for the $54 million financing took place today at the Ciragan Palace in Istanbul, Turkey.   Executives from TAV Airports Holding’s Board of Directors, IFC, and EBRD were in attendance.  

Tav Georgia holds an 11.5-year concession from the Tbilisi International Airport Joint Stock Company to design, finance, construct, and operate the Tbilisi International Airport. TAV Georgia has the option to extend the concession period for an additional five years by designing and constructing the upgrade of (but not operating) the Batumi International Airport.  

Located 20 kilometers from the capital city, Tbilisi International Airport is the main airport in Georgia.  In 2005 it handled approximately 535,000 passengers, an increase of 33 percent over the previous year. Batumi International Airport serves the city of Batumi, located approximately 20 kilometers from the Turkish border in southwestern Georgia. Batumi is a main port on the Black Sea, a transport center for petroleum from Azerbaijan, and a popular tourist destination. Anticipated increase in both business and tourist travel to Georgia has created the need for substantial upgrade and expansion of the airport facilities to allow the airports to operate at international standards of safety and efficiency, which are essential for Georgia’s continued economic progress.

TAV Airports Holding with its joint-venture partner Urban, a Turkish construction company, took over the operations of Tbilisi International Airport in November 2005. Construction of the new terminal in Tbilisi started in January 2006. A groundbreaking ceremony for construction of the Batumi International Airport took place in May 2006. Total investment for both projects is expected to be about $77 million. Planned opening of the new Tbilisi airport terminal is scheduled for November 2006 and, when completed, is expected to serve 1,500 departing and arriving passengers per hour. The airport will be one of the largest and most modern airports of the region, with a total indoor area of 24,000 square meters, an apron of 40,000 square meters, a runway upgraded to international standards, and 24 new check-in counters, three new boarding bridges, and modern baggage screening systems.

"Tbilisi International Airport and Batumi International Airport are of significant importance as an integral part of the country’s transport and economic infrastructure. By supporting the expansion and modernization of both airports, IFC's financing for TAV Georgia will help increase capacity and improve operating efficiency and performance standards in these two airports that are critical for the growth of business activity and tourism in the country," said Francisco Tourreilles, director of IFC's Infrastructure Department. "The financing to TAV Georgia, which is IFC’s first investment in transport infrastructure in Georgia, allows IFC to support economic growth and the development of public-private partnerships in the country," noted Edward Nassim, IFC's director for Central and Eastern Europe. “The project is a clear example of the role Turkish companies are playing in intraregional investments, which contribute significantly to the region’s development,” said Shahbaz Mavaddat, IFC’s director for Southern Europe and Central Asia.

“Being among the few companies in the world which specialize in both construction and operation of airport terminals and also known for its high quality standards, TAV has a remarkable project finance history with banks such as Hypo und Vereinsbank AG and the World Bank. We are proud to say that one of the most important factors underlying these loans is our accumulated know-how in the sector. We believe that the support shown by IFC and EBRD to our company is an indicator of their trust in Turkey and the dynamic Turkish private sector.” said Sani ªener, President and CEO of TAV Airports Holding.

“This is the first of two build-operate-transfer projects in the airport sector in the region that the EBRD is expected to sign in the first half of 2006. Today’s event is significant, given that this is the first BOT project to be undertaken in Georgia,” said Riccardo Puliti, director of the EBRD’s Transport Team. “It paves the way for further investments of this type in Georgia and the wider region, with positive implications both for economic growth and for development.  The signing of the loan agreement today raises total EBRD committment in Georgia to $450 million.

TAV

TAV Airports Holding has acquired recognition in a short period of time among international finance circles with its know-how and success in national and international projects. TAV is controlled by the Tepe and Akfen Groups and specializes in airport financing, design, construction, and operations. TAV currently operates Istanbul Ataturk Airport, Turkey’s main gateway to the world and, once construction is completed in 2006, will start operating Izmir Adnan Menderes and Ankara Esenboga International Airports. The construction and operation of the Tbilisi International Airport in Georgia represents the last in a series of international investments by TAV, which also include the construction of the Batumi International Airport terminal building in Georgia, Cairo International Airport terminal building in Egypt, and Doha International Airport terminal building in Qatar.

TAV was the first Turkish company to receive Project International magazine’s EMEA prize for the most successful financing project of the year in Africa, Europe, and the Middle East, an award also known as the “Financing Oscar.” Project Finance is a publication of EuroMoney, one of the leading finance magazines of the world. TAV was also given the Engineering Award of the year by the American Consultancy Engineering Committee and was recognized as the “best operator in Europe” by Travel Quality.

IFC

The mission of IFC (
www.ifc.org) is to promote sustainable private sector investment in developing and transition countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses.  From its founding in 1956 through FY05, IFC has committed more than $49 billion of its own funds and arranged $24 billion in syndications for 3,319 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY05 was $19.3 billion for its own account and $5.3 billion held for participants in loan syndications. IFC’s portfolio of investments in the Europe and Central Asia region currently stands at $5.7 billion, of which approximately $1.2 billion is invested in Turkey across diverse sectors and companies.

EBRD

The European Bank for Reconstruction and Development (
www.ebrd.com) was established in 1991 when communism was crumbling in central and eastern Europe and ex-Soviet countries needed support to nurture a new private sector in a democratic environment. Today the EBRD uses the tools of investment to help build market economies and democracies in 27 countries from central Europe to central Asia.

The EBRD is the largest single investor in the region and mobilizes significant foreign direct investment beyond its own financing. It is owned by 60 countries and two intergovernmental institutions. The mandate of the EBRD stipulates that it must only work in countries that are committed to democratic principles. It provides project financing for banks, industries, and businesses, both new ventures and investments in existing companies. It also works with publicly owned companies to support privatization, restructuring of state-owned firms, and improvement of municipal services. The bank uses its close relationship with governments in the region to promote policies that will bolster the business environment.