Stomana Industry SA
MIGA’s has provided €21.5 million ($21 million) in reinsurance coverage to the Export Credit Insurance Organization of Greece (ECIO), the Greek export credit agency, for its €30.75 coverage provided to Sidenor Iron Processing Industry S.A. (Sidenor), for its €41 equity investment in Stomana Industry S.A. (Stomana) in Pernik, Bulgaria.. The reinsurance period offered by MIGA is for five years and the coverage is against the risks of transfer restriction, expropriation, war and civil disturbance.
Sidenor is a member of the Viohalko Group, the largest metals complex in Greece and one of its leading industrial groups. The Stomana project is an acquisition, accompanied by modernization and financial restructuring, and represents an important step in restructuring and modernizing a vital component of the Bulgarian steel industry.
Stomana, the second largest steel company in Bulgaria, was a highly indebted state-owned enterprise that was declared bankrupt in 1999. This project will allow for productive manufacturing assets to be modernized and returned to efficient usage.
Although the project will not directly create additional employment it will save up to 1,650 jobs in a sector that suffers from high unemployment. The project has other development impacts including, the generation of approximately €18 million in government revenues over the first five years. Furthermore, the project contributes to important regional integration processes by helping Bulgaria to fulfill one of the EU accession criteria which requires the restructuring of the steel industry. This will be MIGA’s first reinsurance project with ECIO with whom MIGA signed a Memorandum of Understanding in 2001. MIGA’s reinsurance was crucial for ECIO for both capacity and portfolio reasons.