RusForest AB (publ) (“RusForest” or the “Company”) (NASDAQ OMX: RUSF), a Swedish forestry company with operations in Russia, has secured bank financing for the wood pellet plant under construction in Arkhangelsk.
As previously disclosed, RusForest has engaged AS Hekotek (“Hekotek”), a mechanical engineering company, to build a wood pellet production facility at the Company’s LDK-3 sawmill in Arkhangelsk. The pellet facility will have an annual capacity of up to 100,000 tons and will allow RusForest to monetize its sawmill by-products by exporting wood pellets to Europe. Total investment for the pellet plant is estimated to be approximately EUR 12 million, including value added tax (“VAT”), with approximately 70 percent financed by local bank facilities.
RusForest has now secured financing from CentroCredit, a Russian bank, in order to purchase the pellet equipment and finance construction and installation. The financing consists of two tranches. The first tranche amounts to EUR 4.9 million and carries an effective annual interest rate of 7 percent. The second tranche amounts to RUB 170 million (approximately EUR 4 million) and carries an effective annual interest rate of 13.5 percent. Both tranches have a 5-year maturity.
The Company expects the pellet plant to be operational during the first quarter of 2014.