KAZAKHSTANI STEELWORKS RECEIVES SYNDICATED LOAN.

On April 14, a syndicate of Western banks confirmed, in a strong vote of confidence, a ten-year $250 million loan, launched jointly by the European Bank for Reconstruction and Development (EBRD) and the International Finance Corporation (IFC), to Ispat Karmet in Kazakhstan. Ispat Karmet, one of the world’s largest single-site integrated steel plants with two power plants and fifteen coal mines, is a member of the LNM group. The London-based Ispat has been running the Qaraghandy Karmet steelworks in central Kazakhstan since autumn 1995. The banks involved in the loan are ABN AMRO, Bayerische Landesbank, Credit Suisse First Boston, ING Barings and The Royal Bank of Canada Europe Limited (www.ebrd.com; Itar-Tass, April 14)

The syndicated loan, fully underwritten and the largest ever granted to any private company in a member-country of the CIS, was preliminarily agreed in December between Ispat-Karmet, the EBRD and the IFC. The three plan to invest a total of $800 million in the steelworks, of which Ispat-Karmet will put up $350, the EBRD-guaranteed Western syndicate–$250 million, the EBRD itself–$135 million, and the IFC–$65 million. (Panorama [Almaty], December 12, 1997) The loan will be used to modernize the steelworks, purchase new machinery, install a new conveyor belt and overhaul the coal mines operated by Ispat-Karmet. A significant proportion of the loan will go toward protecting the local environment. In fact, the IFC’s contribution contains the largest single environmental component ever granted by the lending institution.

The confidence displayed by the lenders reflects the success of Ispat Karmet’s management contract signed by the government of Kazakhstan with the Ispat company back in 1995. Unlike several of Kazakhstan’s companies under foreign management, the Qaraghandy steelworks has seen a relatively swift payment of workers’ pension and wages arrears and a significant increase in output since its 1995 takeover by Ispat. –SC

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