Transaction Of The Year

28.05.2014
In December 2013 a great transaction was closed in Western Siberia which opened the epoch of partnership for major companies of the region. The tmn journal has found out why Antipinsky Oil Refinery refused to accept financing from abroad having received USD 1.75 billion credit from Sberbank of Russia and what it means for Russian private business. 

Extension by West Siberian Bank of Sberbank of Russia of credit to Antipinsky Oil Refinery is the most remarkable financial event of our region according to the results of the past year. The transaction worth USD 1.75 billion closed for the term of 10 years has changed the development of business history in Western Siberia. It has become the evidence of the highest level of mutual confidence for its partners, an example of new potentials in the economy for private business. The tmn journal arranged for a business meeting with representatives of the parties thereto: Gennady Lisovichenko, General Director of Antipinsky Oil Refinery CJSC, and Aleksandr Anashchenko, Chairman of West Siberian Bank of Sberbank of Russia. During our conversation we focused on specifics of the major transaction of the year.

tmn: For a long time Antipinsky Oil Refinery preferred to use foreign investments, but in 2013 it transferred to Russian capital only. What events conditioned the change your strategic partner?

Gennady Lisovichenko: We have transferred to using Russian capital because now Western banks cannot offer “long” money, even for seven years, without which such projects as ours are impossible. Foreign banks issue cheap but short-term credits. Recently the president recommended that Russian financial institutions should take a more active part in the area of industry crediting and now they are ready for it. Taking into consideration these factors we have transferred to Russian capital.

THE USD 1.75 BILLION TRANSACTION CLOSED FOR THE TERM OF 10 YEARS HAS BECOME THE MAJOR ONE IN THE AREA OF CREDITING PRIVATE BUSINESS IN RUSSIA

tmn: Some time ago when Antipinsky Oil Refinery substantiated its choice of foreign investments it pointed out, in particular, to high interest rates of Russian banks. Why today the refinery’s chief executives have decided in favor of Sberbank? On which terms and conditions has the transaction been closed and to what extent are they unique for Russian reality?

Gennady Lisovichenko: Sberbank has been chosen by the refinery’s chief executives since we managed to come to agreement on terms advantageous for both parties, including in respect of interest rates, covenants and the credit time period. In addition to that, Sberbank’s credit saved us from the necessity to work with a large number of banks granting relatively small amounts. Let me note that the borrowed funds have been channeled to the refinancing of existing indebtedness, as well as to further development and modernization of the refinery for the purpose of quality improvement and product range diversification.

INFORMATION

In December 2013 Sberbank arranged financing for Antipinsky Oil Refinery CJSC and NewStreamTrading AG for the total amount of USD 1.75 billion for the period of 10 year, and in January 2014 it provided bank guarantees up to 4 billion rubles.

The bank has refinanced the current credit portfolio of the refinery and has provided funds for completing modernization of the enterprise, what will enable the company to significantly improve its product range, increase the refining margin and meet the scheduled deadlines of the refinery modernization.

The important role and significance of the project were emphasized at the level of the top management of Sberbank of Russia: the refinancing of Antipinsky Oil Refinery was acknowledged to be the best credit transaction of 2015 at the annual meeting of Sberbank CIB.

Strategic partnership between Antipinsky Oil Refinery and Sberbank will continue by establishment of additional limits and introduction of new oil products. Particularly, the format of the document-line setup and financial-derivative arrangement has been envisaged. In a long-term perspective Sberbank will take part in further modernization of the complex.

Aleksandr Anashchenko: For a long time Russian national banks had no infrastructure for such project management and this fact was of greater importance for business people than price parameters in case of selecting investors. Now the situation has changed: strong management teams have been formed on the Russian market, project offices are functioning which can “package” such complex transactions. Commissioning of additional refining facilities at Antipinsky Oil Refinery is a significant event for the entire Urals Federal District. The financial facility granted to the enterprise is unique because banks very rarely extend credits for such large-scale projects without risk sharing. We have developed a “custom-made” project for Antipinsky considering conducted expert examinations and special conditions of the credit facility.

tmn: Say a few words about the progress of the transaction. What funds have been raised by Sberbank for its successful implementation?

Aleksandr Anashchenko: No more than 10 people of Sberbank Group (including our colleagues from Sberbank CIB и SberbankSwitzerland AG) worked at the project – this made it possible not to “disperse” responsibility and to focus on the objective maximally.

However, the final objective of the prompt transaction closing required a large number of experts specialized in transactions and dedicated professionals – at the time of disbursement of credit funds the team of fifty people was already working. Besides, in connection with the structuring of the transaction and the package of terms on the British law outsourced legal advisers helped us for the purpose of better protection of interests of the parties. Reference to foreign regulations made it possible to unify approaches to credit and security documentation, as well as to involve the export trader of Antipinsky Oil Refinery CJSC registered abroad in the transaction as a co-borrower.

tmn: What happened to be most difficult and how have you managed to cope with these difficulties?

Aleksandr Anashchenko: Implementation of the project complying with a tight schedule became the main difficulty: funds were to be provided by the end of 2013, otherwise the lack of finance could result in failure to meet the agreed schedule of the refinery modernization. The final stage was completed within two months what was a unique domestic record for suchlike projects. It has become possible due to not only a well-coordinated work of the bank’s team, but also to the efficiently organized dialogue with the professionals of Antipinsky Oil Refinery, first and foremost. We would like to express our special gratitude to Aleksandr Gorbachev and Nikolai Parshin, in charge of financial activity, and, of course, to Dmitry Mazurov and Gennady Lisovichenko, for their active support of our joint work.

tmn: Gennady Alekseyevich, how did the specialists of West Siberian Bank of Sberbank prove themselves? How have they applied their professional competence?

Gennady Lisovichenko: It is always pleasant and easy to work with professionals. The fact of the credit provision within extremely tight schedule shows how competent Sberbank specialists have proved to be. From the very beginning we comprehended not only high professional level of our partners, but also their intention to close the transaction successfully, mutual understanding of all clauses of our agreement. It has also become clear to us that that the bank’s employees have amassed enough experience for dealing with major projects, including oil refinery projects. We are sure that we have found a reliable strategic partner, such as Sberbank, for further development and would like to express our special gratefulness to German Gref who participated in the creation of perspectives for modernization of the enterprise. Sberbank doesn’t set forth any strict conditions for our partnership, moreover, it encourages us not to slow down our development rates, and this credit will be by no means the last.

tmn: Aleksandr Grigoryevich, Sberbank CIB Managing Director Kirill Polishkin pointed out that the prompt closing of such transactions had become normal practice for Sberbank. Which Russian national projects can be comparable to the transaction with Antipinsky Oil Refinery?

Aleksandr Anashchenko: Actually, the work with corporate projects has moved to a new level at Sberbank. We try to fulfill as much as possible in all transactions, but it is very difficult to compare effective results: several factors matter in each achievement among which promptness is one of the most important, but not always decisive. We have given ourselves one more good mark for the year 2013: it if for the implementation of the project on the transfer of Rosneft subsidiaries to settlement and cash service. The major part of the salary project has been fulfilled on the territory of the Nizhnevartovsk Branch of Sberbank of Russia. About 10 thousand employees of the company subsidiaries have been transferred to servicing within the shortest possible time, 14 thousand cards have been issued.

tmn: The transaction on providing finance by Sberbank to Antipinsky Oil Refinery has become the major deal in 2013. What influence has it exerted (and can exert in future) on relations between private business and financial structures?

Gennady Lisovichenko: Our transaction has demonstrated a perfect example to private business of a new opportunity to work not only with Western creditors who often set forth not very convenient (and sometimes extremely tough) conditions for providing finance to their partners, but also with major Russian financial institutions. Sberbank is one of the leaders in financial environment and of late it has significantly advanced to Russian business.

We recommend that our national entrepreneurs seriously consider the abovementioned potentials of Sberbank and other major Russian banks.

Aleksandr Anashchenko: Together with our colleagues from Sberbank CIB we have proved the efficiency of the synergy between the territorial branch and the parent corporate-investment structure (Sberbank CIB renders assistance to us for selecting proper instruments and technologies). High significance of the fulfilled project is marked at the top-management level of Sberbank: providing finance to Antipinsky Oil Refinery has been acknowledged the best credit transaction of 2013 at the annual meeting of Sberbank CIB. Today Sberbank is ready for such large-scale projects and for the dialogue with business. Presently we are studying several major projects in related industries. Now we have formed one of the strongest corporate models and the bank intends to move its partners to a qualitatively new level of business development.

tmn: Gennady Alekseyevich, how is the implementation of the Development Strategy of Antipinsky Oil Refinery progressing?

Gennady Lisovichenko: We progress in strict compliance with the schedule of modernization. In late January the third oil-refining unit with the capacity of 3.7 million tons was commissioned as a result of which the established refining capacity reached 7.74 million tons of oil p.a.. Five-stage treatment facilities meeting the strictest environmental standards have been put into operation. Due to up-to-date methods of treatment of industrial, rainfall and domestic sewage waters the refinery can reuse up to 60% of treated wastewaters for technical purposes of the enterprise, and improve the remaining 40% of water as required by hygienic standards applicable to surface water protection. In addition to that this year we are to commission three workshops intended for the production of euro-5 diesel fuel.

The most important events for our refinery are still lying ahead: it is the commissioning of secondary-refining units. Everything what was done earlier was aimed at the growth of the refinery’s capacity, at the formation of the basis for ensuring efficiency of these processes since they were economically reasonable only at sufficiently large facilities. This year we will commission a diesel-fuel hydrotreating unit due to which the refinery will start to produce Euro-5 diesel fuel already in the fourth quarter of this year. In the fourth quarter of 2015 we will increase the refining efficiency up to more than 94% as a result of commissioning of the deferred tar carbonization unit, and in the first quarter of 2016 we will start the output of Euro-5 gasoline. Thereafter the semi-product share at the refinery will reduce to 20% (gasoil). And then, by 2018, we will build the hydrocracking unit which will make it possible to get rid of all semi-products. Very important fact can be seen behind these figures for the Tyumen Region: for the first time it will receive an opportunity to meet the demand for POL on account of its own production. What is especially important, the number of jobs at the enterprise will reach 2500.

tmn: Aleksandr Grigoryevich, after acquiring Troika Dialog, one of the largest private investment companies, Sberbank has seriously focused on investment business. To what extent is the Tyumen Region attractive for the company in this respect?

Aleksandr Anashchenko: The Tyumen Region is traditionally among leading Russian regions in terms of investment attractiveness, including for foreign investors. We have created favorable conditions for implementation of serious projects of the federal level. Key players of Russian and international markets began their business with Sberbank in our region. Our objective is not simply investment, we aspire to develop business of our clients, provide them with not only financial, but also consulting support. We want to be their trusted advisers on key financial issues for a long time, to meet there demands as much as possible in case of complex solutions. Today we see great potential in the oil and gas sector, industrial production, and power industry. There are some major М&А projects in our list, as well. But it should be remembered that Sberbank is a universal bank. We service both, major companies with multibillion revenues and private entrepreneurs which just start their business.

WE HAVE FOUND A RELIABLE STRATEGIC PARTNER, SUCH AS SBERBANK. MOREOVER, IT DOESN’T SET FORTH ANY STRICT CONDITIONS BUT ENCOURAGES US NOT TO SLOW DOWN OUR DEVELOPMENT RATES. THIS CREDIT WILL BE FAR FROM THE LAST.

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