China Eximbank provides $133.9 million buyer’s credit loan for Penza Cement Plant Construction Project

Project narrative

In 2009, the Export-Import Bank of China and Vnesheconombank (VEB Bank) — a Russian government-owned development bank — signed a $133.9 million buyer’s credit loan for the Penza Cement Plant Construction Project. The borrowing terms of the loan are unknown. Vnesheconombank used the proceeds of this loan to on-lend to a special purpose vehicle called LCC Asia Cement (or Asia Cement Ltd.), which was responsible for the construction and operation of a cement plant in the Nikolsk district within Penza region. The on-lent proceeds were then to be used by LCC Asia Cement to finance an engineering, procurement, and construction (EPC) contract with China National Machinery Import & Export Corporation, which was signed on February 20, 2008. The total cost of the Penza Cement Plant Construction Project was $370 million and it was financed with a mix of debt and equity. Vnesheconombank contributed $259.6 of debt financing and LCC Asia Cement contributed $110.4 million of equity. Construction began on or around June 25, 2008. The cement plant, which employs around 450 people, officially opened on May 29, 2014. It has a production capacity of 1.8 million tons of cement per year. It uses a “dry” method of manufacturing cement, which unlike the traditional “wet” method of manufacturing cement, significantly reduces electric power, natural fuel, and water consumption. In August 2016, LCC Asia Cement engaged in a debt-for-equity swap with Vnesheconombank. Vnesheconombank assumed responsibility for $86.5 million of its debt in exchange for a 49% ownership stake.