RLPC-Nord Stream project financing nears agreement-sources

LONDON Wed Oct 21, 2009 9:52am BST

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LONDON Oct 21 (Reuters) - Banks advising Nord Stream group on its 3.9 billion euros ($5.84 billion) financing are expected to receive final pricing bids and commitments from lenders this week, banking sources close to the deal said.

The financing, which is being advised by Commerzbank, Royal Bank of Scotland, SG and Unicredit, backs two pipelines bringing Siberian gas to Europe under the Baltic Sea.

The financing has raised over 15 percent more than the target amount after lenders showed an unexpected level of interest in larger tickets of around 300 million euros, two sources said.

As previously reported, the total financing includes a 3.1 billion euros, 16-year facility that will be covered by export credit agencies Hermes and Sace, as well as by the Federal Republic of Germany under its Untied Loan Guarantee Programme called "UFK" which covers political and commercial risk similar to Hermes [ID:nL2500093].

The covered loan is split between a 1.6 billion euros Hermes loan, a 1 billion euros UFK loan, and a 500 million euros Sace facility.

There is also an 800 million euros, 10-year uncovered commercial loan.

Pricing on the deal is likely to remain at the original pricing model of around 400 bps on the commercial tranche and around 200 bps on the covered financing, banking sources close to the deal said.

The debt covers 70 percent of the project cost, while the shareholders will provide the remaining 30 percent, the Nord Stream consortium said on its website.

The Nord Stream consortium, which involves Russian gas export giant Gazprom (GAZP.MM), Germany's E.ON (EONGn.D) and Dutch Gasunie, aims to have the twin pipeline up and running in 2011 and 2012, bringing 55 billion cubic metres of Russian gas to Germany and further to other European Union countries each year. ($1=.6678 Euro) (Reporting by Alasdair Reilly & Christopher Mangham; Editing by Hans Peters)

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