Ethiopian concludes USD 1.2 bln agreement


Ethiopian Airlines, the national flag carrier, has concluded a 1.2 billion dollar loan process for the purchase of the much awaited ten Dreamliners (B787-8).
Officials of the African giant told Capital that the legal documentation process that includes all parties; lenders, manufacturers and financial guarantors was finalized recently. Experts in the industry said that the legal documentation process is in the final stages for closing the deal successfully. Nega Mekonen, Vice President of Corporate Finance of Ethiopian, told Capital that the initial deal of the lending process was concluded around the end of last year.
For the purchase of the Dreamliners, different types of loans were required including a loan guarantee secured from the EX-IM Bank of the United States.  The Export-Import Bank of the United States is the official export credit agency of the United States. EX-IM Bank’s mission is to assist in financing the export of U.S. goods and services to international markets.
According to the Vice President, a Dutch based firm ING Capital, Emerging Capital Partners (ECP) based in the US, Netherlands Development Financial Company (FMO) and US based ICF International (Inner City Fund) are the junior lenders that contributed 12.5 percent of the total amount needed to purchase the Dreamliners.
ECP is the first private equity group to raise more than $1.8 billion for investment in companies across the African continent.
Eighty five percent of the loan was covered by JP Morgan Chase & Co. and ING Group, respectively. 
“The balance 12.5 percent is covered by the airline itself,” Nega explained though he kept the interest rate of the loan confidential.
Tewolde Gebremariam, CEO of Ethiopian, told Capital that the loan payment for the dominant financer, JP Morgan Chase & Co. will conclude within 12 years.
The American Government bank (EX-IM) played a crucial role in guaranteeing 85 percent of the loan and other additional costs related with the purchase of the most advanced Boeing airplane.
Ethiopian expects to receive the first Dreamliner on August 16, while four other Dreamliners will arrive before the end of 2012.
Some Airbus airplanes are also on the way as Ethiopian recently purchased 12 Airbus A350s.
Ethiopian has recently acquired eight Q400 NextGen airliners from Bombardier which it operates for short and medium range long local and regional flights. It’s also in the process of acquiring, later in 2012, five upgraded Q400 NextGen planes.
Reports indicate that two of the five planes will be operated by Ethiopian Airlines and three by its affiliate, ASKY Airlines of Togo in which Ethiopian has a 40 percent share.