China Eximbank provides RMB 100 million government concessional loan for the Kyrgyz-Chinese Paper Mill Project (Linked to Record ID#40305, #40304)

Project narrative

On April 12, 2001, China Eximbank and the Kyrgyz Ministry of Finance signed an RMB 100 million government concessional loan (GCL) agreement [CHINA EXIMBANK GCL NO. (2001) 9 (82)] for the Kyrgyz-Chinese Paper Mill Project. The borrowing terms of the loan were as follows: a 15-year maturity, a 0-year grace period, and a 3% interest rate. Plans for the paper mill began in the 1990s and construction reportedly began in August 2000. This paper mill project was succesfully completed and put into use in August 2002. The paper mill is operated by a joint venture called Kyrgyz-Chinese Paper Mill OJSC. After it went into production, it experienced a series of disturbances, investigations, and inspections, to the detriment of normal operations. The factory, located in Tokmok, went bankrupt within three years. There had been serious accusations of financial wrongdoing and violations by the plant's Chinese employees. The borrowing terms of this loan were renegotiated twice. The first rescheduling in 2003 is captured via Record ID#40305. The maturity date (June 6, 2017) and the interest rate (3%) were left unchanged, but the lender (China Eximbank) waived the requirement that the Ministry of Finance of the Kyrgyz Republic make principal and interest repayments until September 20, 2007. This amendment effectively represented the provision of a 4.25 year grace period. The second rescheduling in 2014 is captured via Record ID#40304. The interest rate applied to the outstanding balance of loan was reduced from 3% to 2%. The maturity date (June 6, 2017) was left unchanged and no additional grace period was offered. At the time of the second restructuring, Kyrgyz-Chinese Paper Factory had gone bankrupt and the Government of the Kyrgyz Republic was seeking to sell off its assets. On March 16, 2015, the Government Kyrgyzstan announced that the paper mill had gone through bankruptcy procedures and its was evaluating the possibility of selling its assets for debt repayment purposes.