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PhosAgro Receives EUR 73.4 Million Long-Term Loan from UniCredit Bank with EGAP Guarantee for Construction of New Urea Capacity in Vologda Region

3 November 2015
Moscow – PhosAgro (Moscow Exchange, LSE: PHOR), one of the world’s leading vertically integrated phosphate-based fertilizer producers, has received 12-year, EUR 73.4 million loan from UniCredit Bank Czech Republic and Slovakia, a.s. with insurance cover from the Czech Republic Export Guarantee and Insurance Corporation (“EGAP”).

The funds from this loan will be used for project documentation and acquisition of equipment from the Czech engineering firm Chemoproject Nitrogen a.s. for the construction of a granulated urea production line with a capacity of 500 ths tonne/year at PhosAgro-Cherepovets in the Vologda region.

Ceremony participants included the Russian Federation Deputy Prime Minister Arkady Dvorkovich, the Head of the Trade Mission of the Russian Federation in the Czech Republic Sergei Stupar,  First Secretary of the Russian Embassy in the Czech Republic Igor Plaksin, EGAP Supervisory Board Chairman Jaroslav Šulc, PhosAgro CEO Andrey Guryev, UniCredit Bank Czech Republic and Slovakia, a.s. Management Board Chairman Jiří Kunert and Chemoproject Nitrogen CEO Tomáš Plachý. 

PhosAgro CEO Andrey Guryev said: “After receiving a USD 440.6 million syndicated loan from JBIC to finance the construction of our new 760 ths tonne/year ammonia line, PhosAgro has agreed to a 12-year loan from UniCredit with cover from EGAP at an interest rate below 3%. 

“In an environment of limited access to long-term financing, PhosAgro has once again proven it is a first-class borrower.  I would like to thank our Czech colleagues for this productive cooperation.”

EGAP CEO Jan Procházka said: “Even though Czech exports to Russia have declined somewhat in the last year, EGAP has consistently said it will support insurance coverage for the export of high-tech equipment to Russia, even if we have taken a more cautious approach following the rouble devaluation.  New transactions must have an acceptable level of risk: in this case both the experienced domestic exporter and the borrower fully meet the key criteria for export insurance.  PhosAgro is a leader in the global fertilizer market, has international credit ratings and enjoys significant foreign currency revenue.  We have insured CZK 5 billion of Czech exports to Russia this year, and the contract between Chemoproject Nitrogen a.s. and PhosAgro accounts for over CZK 3 billion of that amount.”

UniCredit Czech Republic and Slovakia a.s. Management Board Chairman Jiří Kunert said: “Czech exporters to Russia in sectors like machine building, metallurgy and chemicals remain active, as confirmed by this transaction.  This is the largest loan covered by EGAP that we have ever issued to a Russian company.  UniCredit Group’s strong position in the Russian market also played an important role in organising this financing.”

AO UniCredit Bank in Russia CEO Mikhail Alekseev said: “UniCredit Russia and PhosAgro are long-time strategic partners.  We are interested in long-term cooperation with our corporate clients and we seek to offer them the right solutions to enable them to achieve their goals effectively with the support of UniCredit’s international presence.”

The the third urea line in Cherepovets, construction of which began in June of this year, is part of a comprehensive investment project centred around the new 760 ths tonne/year ammonia capacity at PhosAgro-Cherepovets.  This investment project, which has a total budge of over RUB 63 billion and runs through 2017, will enable PhosAgro to increase production of mineral fertilizers upon completion of the new ammonia capacity.

Total investments into construction of the new urea line and supporting infrastructure, which will be financed through borrowing, are estimated at RUB 11.5 billion.

The urea and granulation technology will be licensed from the Netherlands company Stamicarbon, a world leader in these technologies. The general contractor for construction of the line is CJSC Trest Koksokhimmontazh.

This will be the first time that Stamicarbon's Urea2000plusTM technology in combination with fluidized bed granulation for producing granulated urea will be used in Russia.  Granulated urea, which is a highly effective fertilizer, enables foreign and domestic farmers to significantly increase crop output, will expand PhosAgro’s product portfolio, and increase the Company’s geographic reach.

The new facility will be on par with the world’s leading urea production lines in terms of energy efficiency, raw material consumption, labour output, uptime between repairs, and ecological safety.

With the launch of the new urea capacity, PhosAgro-Cherepovets may become Russia’s largest producer of this type of fertilizer.