denotes premium content | Jan 6 2009 
Feature
posted 23 Feb 2005 in Volume 8 Issue 4
Ilyich, Ukraine: Demonstrating steely resolve
MLA: ABN Amro, West LB, Natexis Banques Populaires
Borrower: Duferco
Deal size: $100m
Tenor: one year
Signing: June 2004
This facility is unique in that it combines pre-export and post-export financing under one umbrella. And, according to Prabhat Vira, ABN Amro’s head of global commodity finance, the $100m deal also “captures the essence of an end-to-end supply chain approach to structuring solutions”.
The deal has been structured as a limited-recourse pre-export loan to Duferco to support financing of steel deliveries from Ilyich Iron and Steel Works of Mariuopl in the Ukraine. The novelty of the structure is that the limited recourse pre-export financing is taken out by a transactional finance to Duferco after the goods are cleared by customs in the Ukraine. As a result, the financing captures the entire commodity supply chain, starting from pre-production and deliveries to sales and end users. And, the entire cash flow is channelled via an offshore collection account, thereby mitigating the country payment risk for the Ukraine.
Ilyich is the second-largest privately owned steel mill in the Ukraine, with an annual production of approximately six million tonnes of steel. Last year, global commodity finance closed a similar, although smaller, pre-export finance facility with Ilyich, which marked ABN Amro’s first such pre-export finance deal in the Ukraine.
