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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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