IFC'S FIRST INVESTMENT IN ESTONIA TO GO TO CEMENT PRODUCER
Jeanne Segal
WASHINGTON, D.C., Jan. 10 -- The International
Finance Corporation (IFC) has approved financing of US$10 million for Kunda
Nordic Cement A/S, a cement producer in Estonia. This is IFC's first investment
in Estonia, which joined IFC in August 1993, and consists of a loan of
US$6 million and an equity investment of US$4 million. The total financing
package, arranged by IFC as lead adviser, is the largest in Estonia to
date and includes financing from the Estonian Investment Bank, the Finnish
Fund for Industrial Cooperation, the Nordic Environment Finance Corporation,
and the Nordic Investment Bank, and credit lines supported by the export
guarantee agencies of Denmark, Finland, and Sweden. Kunda Nordic Cement
A/S is owned jointly by the Government of Estonia and Atlas Nordic Cement
Ltd. (ANL), a consortium of foreign cement producers that includes Euroc
of Sweden and Holderbank of Switzerland. IFC's investment will help finance
modernization and port development, as well as environmental improvement
and clean-u
p, at the company's cement plant, which has a current annual production
capacity of one million tons. The total cost of the project is estimated
at US$44 million. A substantial portion of Kunda's production will be exported
to northern European markets. With completion of the project financing,
the Estonian Government's shareholding, which is currently 65%, will be
reduced to less than 50%. The balance of the share capital will be held
by ANL, IFC, and other financial institutions. According to Edward Nassim,
Director of IFC's Europe Department, "this project represents a big
step forward in the privatization of Kunda. It should also make the company
more competitive in the long term, while helping to clean up one of the
Baltic Sea's most environmentally troubled areas." IFC, a member of
the World Bank Group, is the largest multilateral source of loan and equity
financing for private sector projects in developing countries. (30)
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