New York, April 27, 2004—The International
Finance Corporation (IFC), the private sector financing arm of the World
Bank Group, has agreed to provide a $25 million loan to Russia’s Siberia
Airlines. The investment agreement was signed today at the 24th Annual
New York Airfinance Conference by Francisco Tourreilles, IFC’s Director
of Infrastructure Department, and by Vladislav Filev, Director General
of Siberia Airlines.
IFC’s $25 million long-term loan to Siberia Airlines will be used to refinance
existing short and medium-term loans assumed earlier by the airline to
finance acquisition and refurbishment of aircraft, to increase its working
capital, and to expand its route network. IFC’s financing addresses a
central constraint to the airline’s growth – an absence of long-term
funding in the Russian market. Internationally, aircraft financing is generally
available for tenors of 12 years, while Russian banks lend to the industry
for up to 3-5 years.
“IFC’s financing will improve the term structure of Siberia Airlines’
debt to match the long-term nature of its assets and will help the company
realize its growth potential at a time of sharp increase in air travel
in line with Russia’s economic growth,” noted Mr. Tourreilles.
The Russian air travel market grew by
23% in the last two years and is expected to grow at least 5% annually
“Signing of the investment agreement with IFC, a member of the World
Bank Group and one of the world’s most respected financial institutions,
is an important step in Siberia Airlines’ strategy of integrating into
the global network of passenger transportation. Our close work with IFC
during the preparation of this project was a valuable learning experience
of how to build relations with major investors in the global capital markets,”
commented Mr. Filev.
Based in Novosibirsk, Siberia Airlines (www.s7.ru)
was created in 1992 and privatized in 1994. Today, it is Russia’s second
largest airline operating a fleet of 53 Russian-made aircraft and carrying
3.5 million passengers to more than 50 destinations across Russia and abroad.
The mission of IFC (www.ifc.org)
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, helps clients improve social and environmental sustainability,
and provides technical assistance and advice to governments and businesses.
From its founding in 1956 through FY03, IFC has committed more than $37
billion of its own funds and arranged $22 billion in syndications for 2,990
companies in 140 developing countries. IFC's worldwide committed portfolio
as of FY03 was $16.8 billion for its own account and $6.6 billion held
for participants in loan syndications.
Russia became a shareholder and a member of IFC in 1993. Since then IFC
has invested over $1.3 billion to finance nearly 70 projects across a variety
of sectors. In the aviation sector IFC provided a $30 million loan to Volga-Dnepr
cargo airline in 2002, the first major foreign investment in the sector.
IFC significantly increased its investment program in Russia in the
last two years, investing $217 million in FY02 (July 1, 2001 – June 30,
2002) and nearly $500 million in FY03. IFC’s increased activity reflects
the improving investment climate in Russia, greater opportunities in an
increasingly broad range of sectors, and stronger foreign investor interest.