MDM Bank closes transaction placing USD125 mn in CLNs for Ukraine’s JSC Zaporozhsky Automobile Plant

13.12.2006 00:00

MDM Bank placed a CLN issue for Ukraine’s JSC Zaporozhsky Automobile Plant (ZAZ, Ukraine). The transaction raised USD125 mn. The issue’s semi-annual coupon was set at an annualized 9.75%. The papers will be redeemed in 36 months plus 5 days. In June 2008, put and call options can be exercised at 100% of par. The full redemption date of the notes is December 21, 2009. The papers were placed among a diversified group of mainly foreign investors. One-third of the issue was bought by private commercial banks and the remaining portion by Western hedge funds and investment banks. The geography of placement was Europe 46%, Asia 39%, and Russia 15%.

TMF company acted as trustee in the transaction, and HSBC served as the payment agent. The placement was preceded by a roadshow in London, Singapore and Hong Kong.

The funds raised will be used by the issuer to refinance its current debt portfolio, replenish working capital and finance its investment program for 2007.

According to ZAZ’s Board Chairman Nikolay Evdokimenko, the company negotiated on tapping international debt capital markets with a number of organizations, including wellknown international banks, but cooperation with MDM Bank proved to be the most productive.

“We are satisfied with our cooperation with the Russian leader in the CLN market, with how the placement was organized, and with its results. The proceeds will allow us to fulfill our plans for production expansion. In 2007, we do not plan to issue any additional debt papers. For us, this was also the first step towards receiving an international credit rating and subsequently issuing eurobonds,” Mr. Evdokimenko said.

“ZAZ is the undisputed leader of Ukraine’s automobile market,” said Igor Smolkin, who heads MDM Bank’s Investment Department. “Good corporate management, modern plants in Ukraine and Poland, an assembly license for GM and DaimlerChrysler cars – including S-class Mercedes – are allowing ZAZ to expand its presence on the national market, in Russia, and in Europe each year. This is the first time a Ukrainian issuer has had the opportunity to place debt denominated in a foreign currency through a Russian bank. We believe this is a success not only for MDM Bank, but also for the entire Russian banking system,” Mr. Smolkin said.

ZAZ is Ukraine’s leading automobile producer. The company is comprised of two automobile production plants (in Zaporozhe and Ilyichevsk), an engine production facility, and nine automobile component factories. The company can produce up to 150,000 automobiles a year. Currently, Chevrolet Lanos, Sens, Opel, Slavuta and Lada models are in production. In 2006, ZAZ will manufacture an estimated 148,000 cars. The company’s automobiles are distributed in Ukraine, Russia, Poland, Syria and other countries.

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19.01.2007 14:20

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