BNP Paribas in landmark credit deal

The credit package will make light work of developing the cement-making sector

The deal will allow the import of equipment for the $346 million Thang Long joint stock company cement-making plant in Hoanh Bo, Quang Ninh province.
BNP Paribas last week signed a $164 million credit agreement with LILAMA Vietnam, which holds a 53 per cent stake in Thang Long, to develop the cement-making project which is due to start production by the end of 2007. The other private investor, the Hanoi Import Export Corporation (Geleximco), holds the remaining 47 per cent.
Pierre Joseph Costa, BNP Paribas’ global head of export finance, said it was the first time that a project developed by a state company, LILAMA, and a private company, Geleximco, has been fully financed through offshore funds.
Area manager of BNP Paribas’ export finance Asia-Pacific division Claudia Belli told Vietnam Investment Review that the interest rate for the 13-year credit contract was “very competitive”.
While declining to disclose the exact figure due to confidentiality concerns, Belli said the interest rate is the London Inter-Banks Offering Rate (LIBOR) plus a margin, and the margin is “very competitive”.
However, Nguyen Thi Kim Thoa, LILAMA’s executive vice president, told VIR the margin was about two percentage points lower than the average commercial interest rate.
The new financing package will raise BNP Paribas’ credit commitment to cement projects in Vietnam to nearly $300 million, said Belli.
“We’re involved in hundreds of projects in Vietnam,” she said. “Vietnam is a key country because it is developing very fast like China.”
BNP Paribas has been a co-financing partner for three other cement projects in Vietnam, contributing 30 per cent of imported equipment credit to the Hoang Mai plant, 35 per cent to the Tam Diep plant and 50 per cent to the Cam Pha plant.
The Thang Long plant is the first cement project BNP Paribas has provided with 100 per cent credit and negotiations for the agreement were concluded within one month, according to Costa. The credit package includes two parts: a buyer credit component, provided with the support of Euler Hermes, valued at 125 million euros and a commercial loan valued at 23 million euros.
The Thang Long Cement Plant project was launched in 2002 with a designed production capacity of 2.3 million tonnes per year. It is one of the biggest cement plants in Vietnam and German company Polysius, a subsidiary of ThyssenKupp, is the project’s sole construction equipment supplier.
Vietnam has about 12 operating cement-making plants with an annual production capacity ranging from 1.2 to 2.4 million tonnes per year each.
BNP Paribas is France’s leading bank in mono- and multi-sourced export credit financing. The company reported its net income group share rose 31.1 per cent to 3.7 billion euros in the first nine months of this year. The group’s after-tax return on equity was 17.7 per cent and the 61 per cent cost/income ratio improved 1.9 percentage points compared with the same period last year (62.9 per cent).