Financed ProjectsSUEK Syndicated PXF-type Facility

Identification Code:

OP/15/0041

Total Operation Cost:

1.000.000.000

Maturity:

60 months

Operation Status:

Description and Purpose of the Operation:

Syndicated Secured Finance Facility for the amount of US$ 1 billion to SUEK PLC. The proposed Facility will be used to re-finance the existing debt obligations of SUEK Group and to fund the client's 2016 Capex maintenance and expansion program. BSTDB loan will be used primarily for Capex purposes.

Countries of Operation:

Russia (100,00 %)

Financial Product:

Loans

Sector:

Materials

Domain:

Private

Borrower/Client:

SUEK PLC, Cyprus

Co-Financiers/Participants:

A syndicate of banks led by the Coordinating Mandated Lead Arrangers: ING Bank NV and UniCredit Bank Austria AG.

Guarantors/Sponsors:

Material subsidiaries of SUEK Group SUEK AG (Switzerland), OJSC SUEK- Kuzbass (Russia), JSC SUEK (Russia) and LLC SUEK-Khakassia (Russia).

Developmental and Regional Cooperation Impact:

The SUEK Facility is consistent with the Bank's operational priorities as outlined in the BoD approved Country Strategy for Russia 2015-2018, which requires to increase the number of BSTDB projects with medium to large, domestic or international private enterprises active in industries, including mining. This Strategy puts particular emphasis on tradable sectors that are export oriented. BSTDB financing of the Project will contribute to funding SUEK its extensive Capex program, aimed at both the maintenance and capacity expansion. BSTDB participation will address an important concern by Moody's – notional limited access of SUEK as a Russian private corporate borrower to international debt capital markets. Ultimately a clearly demonstrated continuous ability of the Group to raise debt financing on international markets may result in enhanced rating of SUEK and improved financing costs.

Environmental Classification and Impact (summary):

Screened B+ E&S Category with medium-high risks and impacts which can be mitigated and largely prevented by closely following the mining industry's best practices in terms of general mine performance, guidelines, and mine design criteria. The review of the coal mining and processing techniques employed by SUEK proved to be in line with existing national and international good industry's practices that ensure high output and efficient mining, at the same time generating reduced environmental impacts and providing safer working conditions. The E&S issues are dealt by Group at the high strategic level, and are supported by relevant policies with clear and straightforward statements and commitments, which provide the necessary framework for SUEK to achieve its strategic sustainable goals. The policies, procedures, and internal corporate standards constitute the Group's integrated E&S Management System. Altogether these allow the Group to address to a high degree any E&S risks and impacts in a structured and continuous basis and respond adequately in cases of emergency. In terms of labor and occupational health and safety performance SUEK demonstrated to continuously improve its performance by introducing comprehensive prevention measures which consist of relevant rules and safety standards, appropriate safety industrial solutions, PPEs, and trainings, which are regularly revised, improved and upgraded to ensure compliance with the industry's good practices, thus, allowing the Group to register good performance in this regard. Nevertheless, more efforts are considered necessary with respect to enforcement of safety rules at the personal level that would ensure a further reduction of industrial accidents, mainly of fatalities. The environmental performance of SUEK over the years has been assessed as positive. The Group employs efficient preventive and mitigation measures to decrease the negative impacts of its coal mining and processing facilities and it has developed and put in place adequate control and monitoring measures. At the local community level the Group plays a significant socio- economic role by providing employment, budget support, human development, and modernization of the local infrastructure, and is engaging in a meaningful, constructive, transparent and respectful manner with its stakeholders.

Operation Leader:

General Industries, Transport, Tourism 1

E-mail:

gitt1@bstdb.org