EBRD, IFC, HypoVereinsbank and Nordea
put together $138 million package
Washington, D.C./London, UK, February 12, 2002—The International Finance
Corporation (IFC) and the European Bank for Reconstruction and Development
are leading an effort to arrange US$138 million of financing to help spread
the reach of Moscow’s recently launched GSM mobile operator, Sonic Duo.
Germany’s HypoVereinsbank and Nordea, the leading financial services
group in the Nordic and Baltic Sea region, are joint arrangers of the EBRD-IFC
loans and arrangers of an export credit facility.
The deal represents the first major international bank financing for a
Russian telecom project since the financial crisis in 1998.
The EBRD and IFC, the private-sector arm of the World Bank Group, will
each provide $40 million, comprising a $24 million loan and $6 million
of quasi-equity for their own accounts and a $10 million “B loan” for
the account of international commercial banks. Nordea and HypoVereinsbank
will each underwrite $10 million of the EBRD-IFC B loans, as well as arrange
and underwrite a $58 million export credit facility, with Nordea as facility
agent, backed by the Swedish Export Credits Guarantee Board (EKN) and supported
by Telefonaktiebolaget LM Ericsson.
The investment will support the construction of Sonic Duo’s GSM 900/1800
network, operating under the Pan-Russian brand MegaFon. The total
investment over the next four or five years is expected to exceed $250
million, with the rest of the financing coming from local banks and shareholders
in a combination of equity and subordinated loans.
The deal fits well with the IFC and EBRD strategies to foster the development
of a market economy, encourage private-sector participation in infrastructure,
mobilize long-term debt financing in Russia and promote foreign direct
investment. It also represents another example of HVB Group’s strategic
focus on and commitment to central and eastern Europe.
Mohsen Khalil, IFC’s Director of Global Information and Communication
Technologies, said: “IFC is pleased that we can play a critical
role in supporting the Sonic Duo project which, through its association
with other MegaFon operating companies, is expected to have a significant
impact on improving competition and telecommunications access to many underserved
areas throughout Russia.”
David Hexter, the EBRD’s Business Group Director for Specialised Industries,
said: “The Moscow market still has enormous growth potential despite the
rapid expansion in the number of subscribers over the last few years. A
third mobile operator can make a significant impact on the way that market
develops.” Mr. Hexter added that the deal is the EBRD’s
seventh telecoms projects in Russia for a total of €177.8 million, including
$35 million invested in 1999 with Golden Telecom, the Russian telecommunications
concern active across the Commonwealth of Independent States.
The expansion of Sonic Duo will have direct benefits for consumers and
businesses, by increasing the wireless penetration in the greater Moscow
region and fostering further competition through the introduction of a
new GSM cellular operator to the market.
Sonic Duo’s shareholders are Sonera, the leading international telecommunications
company based in Finland (35 per cent), and CT-Mobile (65 per cent), a
company controlled by LV Finance Group, a Russian corporate advisory and
venture capital investment group.
Gerald Merz, Hypovereinsbank's Head of Telecommunication, Global Project
Finance, said: “In times when raising commercial bank debt for telecom
projects is really difficult, this transaction proves that markets are
receptive to deals with the right structure and the right story.” Mr.
Merz added: “A financing structure in which sponsors, suppliers, ECAs,
multilaterals and commercial banks share the risks is clearly the way to
go forward in emerging markets. Hypovereinsbank is extremely pleased
to support Sonic Duo and its shareholders in this transaction.”
“Nordea is very pleased with the successful conclusion of this deal,”
says Bo Karlegård, Vice President, Nordea Export & Project Finance,
who coordinates for Nordea in this strategically important transaction.
“This clearly demonstrates our commitment to the Nordic and Baltic
Sea markets and our readiness to assist core customers like Ericsson and
Sonera in the challenging Russian market. We have completed this
transaction in close cooperation with our partner bank HypoVereinsbank
and our joint venture bank in Moscow, International Moscow Bank.”
In addition to the loans from IFC and EBRD, commercial banks will participate
pro rata in the loan backed by EKN and supported by Telefonaktiebolaget
LM Ericsson, as well as in the B loans from the EBRD and IFC. Syndication
of the ECA and B Loan facilities is expected to take place in the first
quarter of 2002.
The EBRD aims to foster the transition from centrally planned to market
economies in central and eastern Europe and the Commonwealth of Independent
States. It is owned by 60 countries, the European Investment Bank,
and the European Community. Visit the EBRD’s website: www.ebrd.com
The IFC’s mission is to promote sustainable private sector investment
in developing 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, and provides
technical assistance and advice to governments and businesses. IFC press
releases are available on line at http://www.ifc.org/pressroom.