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| Tuesday, 3 February 2004 |
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Rs. 3,600 m to set up flour mill at Colombo Port Citi National Investment Bank (Citi National), in partnership with the National Development Bank (NDB), has successfully arranged Rs. 3,600 million to set up a state of the art flour mill at Prince Vijaya Quay at the Colombo Port. Many months of detailed work and negotiations culminated in the signing of the loan documentation on Thursday. Citi National acted as the Lead Arranger for the entire syndicated loan facility and the evolving credit facility for the project. A consortium of six banks led by NDB, together with Commercial Bank of Ceylon Limited, DFCC Bank, Hatton National Bank Limited, National Savings Bank and People's Bank participated in the syndication. Commercial Bank of Ceylon will act as the Agency Bank for this Facility. The flour mill is being set up by Serendib Flour Mills (Private) Limited (SFM), a company with flagship status approved by the Board of Investment (BOI). The total investment of the project is estimated to be Rs. 5,200 million. The plant would have a capacity to mill 300,000 metric tonnes of wheat per annum with the use of modern milling facilities. The mill is expected to be in commercial operation by the last quarter of 2005. The main products of the mill include different varieties of flour, semolina and bran. Wheat flour is used as the base for a number of industries in the food sector, the highest consumption being generated by bakeries. This project would directly benefit the consumer market and the industrial segment through the production of high quality wheat flour with varying characteristics to suit the end product. The availability of quality flour would also act as a catalyst to achieve growth in the food sector and thereby create employment opportunities. The project would also enhance the efficiency in the distribution of flour in Sri Lanka. The project is promoted by the Abdulla Ahamad Al-Ghurair Group (AG Group), a leading conglomerate in Dubai UAE, whose business interests include the Mashreq Bank, the Al Ghurair City, National Cement Co UAE, Masafi Mineral Water Co and Gulf Import and Export Co. The AG Group investment in SFM would be through two group companies, namely National Flour Mills Company Ltd., (NFM) and Emirates Trading Agency Ltd. (ETA). The former operates and manages five flour mills in Dubai (two mills), Lebanon, Sudan and Algeria. NFM has been in the business of milling and distribution of flour since 1976. This company is at present producing 42 varieties of flour to the Dubai market to cater to the various needs of customers. The ETA is a joint venture between Amana Investments (Hong Kong) having diversified business interests in shipping, construction, trading, switchgear manufacturing, travel and tourism sectors. ETA is managing a large fleet of ships to transport commodities globally. The AG Group brings the expertise and experience in managing the total value chain related to the milling and marketing of wheat flour. Commenting on the deal NDB's Assistant General Manager-Corporate Banking, Russel De Mel said "a good product always finds a place in any market. Also, healthy competition whilst satisfying the end consumer creates demand. When Citi National approached NDB to lead the syndicate of financiers, NDB's project financing team counting many years of experience in the subject area, was convinced that this proposal contained the essential ingredients for a well conceived and formulated project. A captive market, proven technology and committed sponsors simplified the decision making task. Citi National's participation in this transaction in turning out a comprehensive feasibility report and structuring a well balanced financing package is laudable. Our own experts in the technical fields made a substantial contribution towards planning out the project implementation and monitoring phases. The Bank's legal experts were instrumental in drafting and executing a comprehensive set of legal documents which were acceptable to the participating banks and to SFM within a brief period of time." Citi National's CEO Vajira Kulatilaka said, "we took up the challenge to instrument this deal under dampened economic conditions prevailing during that time. A comprehensive feasibility study was carried out and the structure of the syndicated facility encompassed appropriate credit enhancements and risk mitigating strategies. We are proud that it has been completed to the satisfaction of all parties," he said. |
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