Tallinn Water Company loan successfully syndicated

An €80 million loan to the Estonian water company Tallinna Vesi (ASTV) has been successfully syndicated by the EBRD and DEPFA Investment Bank Ltd to a group of western European banks.

Mar 12th, 2003

March 12, 2003 -- An €80 million loan to the Estonian water company Tallinna Vesi (ASTV) has been successfully syndicated by the EBRD and DEPFA Investment Bank Ltd to a group of western European banks, highlighting the interest the private sector has in projects with a sound economic structure.

Lead managers in the syndication - which involved €50 million of the original loan amount - are Landesbank Schleswig-Holstein Girozentrale, Nordea Bank Finland Plc, Swedbank and Hansabank (as participants in the Swedbank group), and A/S Vereinsbank Riga, while Kommunalkredit International Bank Ltd is manager.

Lorenz Jorgensen, the EBRD's Head of Syndications, described the syndication as a major boost for private-public-partnership investments in municipal and environmental infrastructure, a target the EBRD very actively pursues. Mr Jorgensen underlined the environmental benefits that the investment in the water company will bring.

Tallinna Vesi became the first utility to be privatised outside the telecommunications sector in Estonia in 2001. The loan will help the company meet European Union standards for water and wastewater services. EU environmental standards have been a driving force for the implementation of water projects in many countries acceding to the EU in 2004. Technical cooperation support for preparing the project has been provided by the EU. The loan will also help the company enter a new phase in its development by improving the efficiency of its balance sheet.

With the syndication in place, the partnership between the EBRD and Tallinna Vesi enters a new phase, introducing a number of international banks to the company. The cooperation with the EBRD started in 1994 with a €22.5 million loan from the EBRD to finance the rehabilitation of water and wastewater treatment plants, groundwater wells and wastewater networks. In 2001 the company was partly privatised and today is 49.6 percent owned by the City of Tallinn, and 50.4 percent by International Water UU (Tallinn) B.V., a special-purpose company registered in the Netherlands. The company also borrowed €15 million from the EBRD to finance post-privatisation investment and optimise the capital structure last November.

The loan to Tallinna Vesi is in line with the EBRD's strategy to promote private-sector investments in municipal projects through public-private partnerships. The EBRD has a strong and successful track record in these projects. In the last six years, it has signed €1.6 billion worth of municipal projects in approximately 120 cities in the EBRD's 27 countries of operations. Of that sum, €1.2 billion was in the water and wastewater sector.

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