Establishing financing in the Ukraine is a significant challenge for foreign banks. However, despite the difficult economic and political climate, FLSmidth has helped facilitate the financing of a second project at the Ivano-Frankivskcement plant, in western Ukraine.
Ivano-Frankivskcement has had a good relationship with FLSmidth for many years and was keen to repeat the success of an upgrade project completed in 2008. A new loan was needed to modernise Line 2 at the plant and boost clinker capacity from 450 tpd to 2,300 tpd.
Supported by Denmark’s Export Credit Agency (EKF), the financing was in place in mid-2013. To mitigate the risk for EKF, the Ukrainian state-owned Ukreximbank was involved. Ukreximbank borrowed money from the Danish bank; Danske Bank, on behalf of Ivano-Frankivsk, based on Danske Bank receiving a guarantee from EKF.
Mutual beneficial transactions
Danske Bank is keen to work together with FLSmidth, taking
up the challenge to finance these sometimes difficult projects. Danske Bank also has a good relationship with Ukreximbank, based on past cooperation: “This project benefitted from our long-standing relationship with Ukreximbank and our already existing framework agreement. Danske Bank has concluded quite a lot of mutually beneficial transactions with this bank – including financing the upgrade of Line 3 at Ivano-Frankivskcement supplied by FLSmidth back in 2006,” explains Helen Taylor, Vice President from Danske Bank.
Once the contract scope and price were settled, the loan was put in place quickly, thanks in large part to EKF’s flexible approach. Maja Lundgaard Leth from EKF explains, “We have a long history of cooperation with Ukreximbank for mainly smaller to medium sized transactions. We were able to put this financing into place, working together with FLSmidth and Danske Bank to ensure the modernisation could get underway quickly.”
Ivano-Frankivskcement has benefitted from the already existing strong relationship with FLSmidth and Ukrexim combined with the flexibility of EKF and Danske Bank. Mr Mykola Kruts, Chief of Supervisory Board of Ivano-Frankivsk cement, says “we are very pleased with the excellent and expedient cooperation between all parties, which has made the project possible”.
The implementation of the upgrade project is progressing well according to plans.
About the Author
Tine.Bremholm-Kokfelt@flsmidth.comMore Content by Tine Bremholm Kokfelt