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Press Release

USD 280 Million Pledged for the Istanbul Strait Road Crossing Project

  • Date2012.07.10
  • View20406

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The Export-Import Bank of Korea announced on June 13 that it will provide USD 280 million in financing for the Istanbul Strait Road Crossing Project, which will be participated by SK Engineering & Construction (SK E&C) and Hanshin Engineering & Construction (Hanshin).

The project connecting Europe and Asia via a tunnel beneath the Bosporus Strait, is the largest private financing initiative in Turkey; SK E&C and Hanshin will collaborate with YAPI of Turkey to oversee the project from project identification to construction and operation.

Engineering, Procurement and Construction (EPC) contract for the project secured by SK E&C and Hanshin totals USD 415 million.

Financial advisory services, offering optimized allocation of finance and risk, provided by Korea Eximbank is regarded by the plant industry to have greatly contributed to the decision to award the high value-added contract to Hanshin and SK E&C.

The Bank significantly reduced operating risks for Korean companies and participating financial institutions by successfully negotiating the minimum revenue guarantee, which guarantees a minimum income level upon completion of the tunnel, and by confirming the financial liability of the Turkish government in regards to the project.

In addition, the Bank facilitated co-financing of USD 680 million with 11 financial institutions including the European Investment Bank, European Bank for Reconstruction and Development, and Korea Trade Insurance Corporation, by showcasing flexible financing conditions, including long-term fixed interest loans and Cash Sweep*.

* After scheduled repayments are made, any remaining funds can be used to pay off loans, thus curtailing the payment period and reducing repayment risk.

Successful procurement of project funding is significant in that 11 global financial institutions have decided to finance the project despite the current credit crunch.

While actively utilizing strengthened networks with global financial institutions to help expand the participation of Korean companies in large-scale projects, the Bank encouraged participation from Japanese banks such as SMBC through regular consultative group meetings established last February with Japanese banks.

A representative of the Bank commented, “We worked hard for three years and offered competitive financing to help Korean companies participate in the project to connect Europe and Asia. The Bank will continue to concentrate support in the early stages of high value-added development projects in order to assist Korean companies successfully participate in the global infrastructure construction industry.”
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