Kronospan to invest in OSB production at its existing plant at Egorievsk near Moscow, one of Russia's largest wood-processing facilities, with 120M loan from EBRD

LONDON , November 17, 2011 (press release) – The EBRD is providing long-term funding of EUR 120 million, including an EUR 50 million syndicated loan, to OOO Kronospan, chiefly to finance the creation of the first Russian plant producing Oriented Strand Board (OSB), an exceptionally strong wood-based panel used in the construction industry which at present has to be imported.

EBRD is the lender of record for the full amount of EUR 120 million under an EBRD A/B loan structure and is taking a seven-year EUR 70 million A Loan onto its own books.

Raiffeisenlandesbank Oberösterreich AG is funding a five-year EUR 40 million B Loan, while Canada’s investment funds company Cordiant Capital is funding a seven-year EUR 10 million B loan matching the maturity of the EBRD’s A loan.

Kronospan is currently a major importer of OSB into Russia, drawing on production from the five OSB plants it operates in Bulgaria, the Czech Republic, Latvia, Luxembourg and Romania. Demand for this type of panelling is mainly driven by the growing demand for timber-framed housing

The company will set up OSB production at its existing plant at Egorievsk in Moscow Region, one of the biggest wood-processing plants in the country, and contribute advanced manufacturing technology in the process.

Russia accounts for 22 percent of the world’s total forests, but its forestry industry produces no more than six percent of global timber output.

The deal has an important energy efficiency component as EUR 4 million will under this loan be invested in a new biomass furnace. It will burn bark waste gathered during wood processing at the plant. This will reduce Kronospan’s energy footprint, lowering the company’s Greenhouse Gas emissions by over 13,000 tons of CO2 a year.

OOO Kronospan is a wholly-owned Russian subsidiary of Kronospan Holdings East Limited, a member of the Austria-based Kronospan group of companies, the global leader in the manufacture of wood-based panels.

Before the completion of today’s deal, the EBRD already committed a total of EUR 382 million for eight Kronospan projects in five of EBRD’s 29 countries of operation. Part of the new EBRD funding under this latest transaction will be used to refinance the outstanding amount under an earlier loan.

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