Kazakhstan Temir Joly NSE (Kazakhstan): Credit lines and investmetn activities

/IRBIS, July 11, 01/ - Following is an information, which is made based on the conclusion of Kazakhstan Stock Exchange (KASE) Listing commission. The information are published due to the admittance of second issue inscribed coupon bonds of Kazakhstan Temir Joly NSE (Astana; KZ2EUY03A368, $100, $30m, July 10.01 - July 10.04, semiannual coupon at 8.0% APR) to the official list of the KASE securities under category "A". The management of Kazakhstan Temir Joly NSE is liable for the reliability of the information presented by the KASE Listing commission. CREDIT LINES In 2001-2005, based on Restructuring plan, the capital expenses of Kazakhstan Temir Joly NSE are to be increased to $823.3m. The company plans to finance using different sources. These are the funds from the loan granted by European Bank for Reconstruction and Development (EBRD), bond issue on domestic market and borrowing from banks and other financial institutions. EBRD loan was granted to help Kazakhstan Temir Joly NSE to improve and perfect the exploitation of the railroads and strengthen the management by implementing the programs aimed at training the personnel. The company has also received different loans from Economic Cooperation Fund (Japan, OECF) to finance the modernization of railroad transportation. Brief review of unpaid long-term liabilities of Kazakhstan Temir Joly NSE as of December 31, 2000 ------------------------------------------------------------------------- Total Unpaid amount, amount, Lender Currency m m Interest Maturity ------------------- -------- ------- ------- ----------- ---------------- Japanese credit, 2020 Eximbank YEN 7,236.0 7,078.4 3.5% (June, December) German credit, 2004 Eximbank DEM 206.7 96.7 8.0% (semiannually) German credit, 2001 Eximbank DEM 2.5 0.1 5.0% (June) 2003 Eximbank KZT 17.8 6.0 10.0% (quarterly) 6-month 2011 ЕБРР USD 65.0 0.7 LIBOR +1.0% (May, November) 3-month 2001 Citibank USD 10.0 5.0 LIBOR +3.0% (February) 3-month 2001 ABN AMRO USD 5.0 5.0 LIBOR +3.0% (June) Ministry of Finance 2003 USD 5.0 3.0 2.0% (June, December) ------------------- -------- ------- ------- ----------- ---------------- The idea of planned financial model of use of investments in the development of railroad industry under the Restructuring program means the following. For the Passenger traffic CJSC will receive: - $27.4m of total investments, credits, loans to construct high speed railroad lien (Talgo), which will be functioning in 2003; - reconstruct car and repair workshop will be financed from the state external loan of OECF. Remaining money will be used by Kazakhstan Temir Joly holding. When becoming a joint stock company, other subsidiaries will be separated with their own fixed assets without any credits granted. INVESTMENT ACTIVITIES Main goal of Kazakhstan Temir Joly NSE investment program is the development and implementation of a number of measures to develop the production base of the railroad transportation, reduction of expenses by modernizing the fixed assets and introducing new technologies. Kazakhstan Temir Joly NSE plans to use KZT50,788m to develop inventory and technical base from 2000 to 2005. In 2000-2001 a total of KZT3,735.8m was raised through EBRD and OECF credits. The EBRD funds were used to purchasing diagnostic equipment and small mechanization facilities for a current repair of the railroads. The OECF funds were used to keep the financing of Railroad transportation development project, which has started in 1996. In 2000 a total of KZT20,120.6m was planned to use for the development purposes, and actual amount used equaled KZT16,791.2m. Kazakhstan Temir Joly NSE plans to invest the funds in upcoming 5 years into: - about $34.0m to the improvement of engines and engine house fleet, including the delivery and use of certain new engines in 2003 for a total of $2.5m per engine; - purchasing of about 2,600 new open top cargo cars in next five years; - to set up power supply at existing power lines for a total of KZT117.2m in next five years; - to upgrade the signaling and communication facilities, with the capital investments reaching KZT0.9m for Almaty-Astana section; besides, signaling equipment upgrade at Jana-Semei-Konechnaya section is planned if cargo is to transported through a new Aksu-Konechnaya line. Part of the funds from the second issue bond placement Kazakhstan Temir Joly NSE plans to use for the replacement and upgrade of signaling and communication equipment. Despite significant reduction of exploitation expenses of Kazakhstan Temir Joly NSE in 1999 and 2000, in the future, in order to improve the effectiveness and decrease the expense the company plans to take following measures: - develop a new operating plan to increase productivity of such assets as the engines and cars, as well as determine the excess of asset; - develop an expenses reduction plan, aimed at the elimination of the excessive routes, stations and other assets, as well as making corresponding changes into personnel and other resources; - attract strategic investments into expenses saving technologies, including computer systems.