Galnaftogaz to sign USD 190 mln loan agreements with EBRD, IFC

Galnaftogaz (UX: GLNG UK, U/R) plans to sign a package of loan agreements totaling USD 190 mln from the European Bank for Reconstruction and Development and International Financial Corporation on September 5, the company announced yesterday in a press release. The EBRD’s facility consists of three tranches: USD 15 mln type A loan (from EBRD), USD 45 mln type B loan (syndicated loan) and USD 20 mln type C loan (subordinated mezzanine financing); in addition, the EBRD will also provide a USD 30 mln investment in equity. The IFC’s facility has the same structure: USD 15 mln type A loan, USD 45 mln type B loan and USD 20 mln type C loan. The company plans to direct USD 150 mln toward distribution network expansion, which includes acquisition of 75 new filling stations, and the remaining portion of the loan to help refinance a USD 60 mln mezzanine loan. Antonina Davydenko: The announcement is neutral for the stock since this is only the formal step to finalize the loans, which were first announced in May and June). We place our recommendation for Galnaftogaz Under Review; its recent performance has erased most of its upside potential.