Loan Number 4059 RU
LOAN AGREEMENT
(COAL SECTOR RESTRUCTURING IMPLEMENTATION ASSISTANCE
PROJECT) BETWEEN RUSSIAN FEDERATION AND INTERNATIONAL BANK
FOR RECONSTRUCTION AND DEVELOPMENT
(Washington, 28.VI.1996)
Agreement, dated June 28, 1996, between Russian Federation (the Borrower) and International Bank for Reconstruction and Development (the Bank).
Whereas (A) the Borrower, having satisfied itself as to the feasibility and priority of the Project described in Schedule 2 to this Agreement, has requested the Bank to assist in the financing of the Project;
(B) the Bank has received a letter dated May 22, 1996 from the Borrower describing a program of actions, objectives and policies designed to achieve adjustment of the Borrower's coal sector (hereinafter called the Program), declaring the Borrower's commitment to the execution of the Program, and requesting assistance from the Bank in support of the Program during the execution thereof; and
(C) the Project will be carried out by the Borrower through the Foundation for the Promotion of the Restructuring of the Coal Industry (Reformugol) with the Borrower's assistance and, as part of such assistance, the Borrower will make available to Reformugol the proceeds of the Loan on a non-reimbursable basis as provided in this Agreement; and
Whereas the Bank has agreed, on the basis, inter alia, of the foregoing, to extend the Loan to the Borrower upon the terms and conditions set forth in this Agreement and in the Project Agreement of even date herewith between the Bank and Reformugol;
Now therefore the parties hereto hereby agree as follows:
Article I
General Conditions; Definitions
Section 1.01. The "General Conditions Applicable to Loan and Guarantee Agreements for Single Currency Loans" of the Bank, dated May 30, 1995 (the General Conditions) constitute an integral part of this Agreement.
Section 1.02. Unless the context otherwise requires, the several terms defined in the General Conditions and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings:
(a) "Project Agreement" means the agreement between the Bank and Reformugol of even date herewith, as the same may be amended from time to time, and such term includes all schedules and agreements supplemental to the Project Agreement; and
(b) "Special Account" means the account referred in Section 2.02 (b) of this Agreement.
Article II
The Loan
Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions set forth or referred to in the Loan Agreement, an amount equal to twenty five million dollars (USD 25,000,000).
Section 2.02. (a) The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement for expenditures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project described in Schedule 2 to this Agreement and to be financed out of the proceeds of the Loan.
(b) The Borrower may, for the purposes of the Project, open and maintain in Dollars a special deposit account in a commercial bank on terms and conditions satisfactory to the Bank, including appropriate protection against set-off, seizure or attachment. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 4 to this Agreement.
Section 2.03. The Closing Date shall be December 31, 1999 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date.
Section 2.04. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time.
Section 2.05. (a) The Borrower shall pay interest on the principal amount of the Loan withdrawn and outstanding from time to time, at a rate for each Interest Period equal to LIBOR Base Rate plus LIBOR Total Spread.
(b) For the purposes of this Section:
(i) "Interest Period" means the initial period from and including the date of this Agreement to, but excluding, the first Interest Payment Date occurring thereafter, and after the initial period, each period from and including an Interest Payment Date to, but excluding the next following Interest Payment Date.
(ii) "Interest Payment Date" means any date specified in Section 2.06 of this Agreement.
(iii) "LIBOR Base Rate" means, for each Interest Period, the London interbank offered rate for six-month deposits in dollars for value the first day of such Interest Period (or, in the case of the initial Interest Period, for value the Interest Payment Date occurring on or next preceding the first day of such Interest Period), as reasonably determined by the Bank and expressed as a percentage per annum.
(iv) "LIBOR Total Spread" means, for each Interest Period: (A) one half of one percent (1/2 of 1%); (B) minus (or plus) the weighted average margin, for such Interest Period, below (or above) the London interbank offered rates, or other reference rates, for six-month deposits, in respect of the Bank's outstanding borrowings or portions thereof allocated by the Bank to fund single currency loans or portions thereof made by it that include the Loan; as reasonably determined by the Bank and expressed as a percentage per annum.
(c) The Bank shall notify the Borrower of LIBOR Base Rate and LIBOR Total Spread for Interest Period, promptly upon the determination thereof.
(d) Whenever, in light of changes in market practice affecting the determination of the interest rates referred to in this Section 2.05, the Bank determines that it is in the interest of its borrowers as a whole and of the Bank to apply a basis for determining the interest rates applicable to the Loan other than as provided in said Section, the Bank may modify the basis for determining the interest rates applicable to the Loan upon not less than six (6) months' notice to the Borrower of the new basis. The basis shall become effective on the expiry of the notice period unless the Borrower notifies the Bank during said period of its objection thereto, in which case said modification shall not apply to the Loan.
Section 2.06. Interest and other charges shall be payable semiannually on June 15 and December 15 in each year.
Section 2.07. The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement.
Article III
Execution of the Project
Section 3.01. (a) The Borrower declares its commitment to the objectives of the Project as set forth in Schedule 2 to this Agreement, and, to this end, without any limitation or restriction upon any of its other obligations under the Loan Agreement, shall act through Reformugol and cause Reformugol to perform in accordance with the provisions of the Project Agreement all the obligations of Reformugol therein set forth, shall take or cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable Reformugol to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance.
(b) For the purpose of the Project, the Borrower shall make available to Reformugol the proceeds of the Loan under an arrangement on a non-reimbursable basis.
Section 3.02. Except as the Bank shall otherwise agree, procurement of the goods and consultants' services required for the Project and to be financed out of the proceeds of the Loan shall be governed by the provisions of Schedule 1 to the Project Agreement.
Section 3.03. The Bank and the Borrower hereby agree that the obligations set forth in Sections 9.04, 9.05, 9.06, 9.07, 9.08 and 9.09 of the General Conditions (relating to insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition, respectively) shall be carried out by Reformugol pursuant to Section 2.03 of the Project Agreement.
Article IV
Financial Covenants
Section 4.01. (a) For all expenditures with respect to which withdrawals from the Loan Account were made on the basis of statements of expenditure, the Borrower shall:
(i) maintain or cause to be maintained in accordance with sound accounting practices, records and accounts reflecting such expenditures;
(ii) ensure that all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures are retained until at least one year after the Bank has received the audit report for the fiscal year in which the last withdrawal from the Loan Account was made; and
(iii) enable the Bank's representatives to examine such records.
(b) The Borrower shall:
(i) have the records and accounts referred to in paragraph (a) (i) of this Section and those for the Special Account for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Bank;
(ii) furnish to the Bank as soon as available, but in any case not later than six (6) months after the end of each such year the report of such audit by said auditors, of such scope and in such detail as the Bank shall have reasonably requested, including a separate opinion by said auditors as to whether the statements of expenditure submitted during such fiscal year, together with the procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals; and
(iii) furnish to the Bank such other information concerning said records and accounts and the audit thereof as the Bank shall from time to time reasonably request.
Article V
Remedies of the Bank
Section 5.01. Pursuant to Section 6.02 (1) of the General Conditions, the following additional events are specified:
(a) Reformugol shall have failed to perform any of its obligations under the Project Agreement;
(b) as a result of events which have occurred after the date of the Loan Agreement, an extraordinary situation shall have arisen which shall make it improbable that Reformugol will be able to perform its obligations under the Project Agreement;
(c) the Charter of Reformugol shall have been amended, suspended, abrogated, repealed or waived so as to affect materially and adversely the ability of Reformugol to perform any of its obligations under the Project Agreement;
(d) an authority having jurisdiction shall have taken any action for the dissolution or disestablishment of Reformugol or for the suspension of its operations; and
(e) a situation has arisen which shall make it improbable that the Program, or a significant part thereof, will be carried out.
Section 5.02. Pursuant to Section 7.01 (h) of the General Conditions, the following additional events are specified:
(a) the event specified in paragraph (a) of Section 5.01 of this Agreement shall occur in respect of an obligation so as to affect materially and adversely the execution of the Project and shall continue for a period of sixty (60) days after notice thereof shall have been given by the Bank to the Borrower; and
(b) the events specified in paragraphs (c) and (d) of Section 5.01 of this Agreement shall occur.
Article VI
Effective Date, Termination
Section 6.01. The following event is specified as an additional condition to the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Conditions, namely that the director general of Reformugol has been employed with qualifications and experience acceptable to the Bank.
Section 6.02. The following is specified as an additional matter, within the meaning of Section 12.02 (c) of the General Conditions, to be included in the opinion or opinions to be furnished to the Bank, namely that the Project Agreement has been duly authorized or ratified by Reformugol and is legally binding upon Reformugol in accordance with its terms.
Section 6.03. The date ninety (90) days after the date of this Agreement is hereby specified for the purposes of Section 12.04 of the General Conditions.
Article VII
Representative of the Borrower; Addresses
Section 7.01. The Minister of Finance or any Deputy Minister of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions.
Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions:
For the Borrower:
Ministry of Finance
Ilyinka Street 9
103009 Moscow
Russian Federation
Telex:
112008
For the Bank:
International Bank for
Reconstruction and Development
1818 H Street, N.W.
Washington, D.C. 20433
United States of America
Cable address: Telex:
INTBAFRAD 197688 (TRT),
Washington, D.C. 248423 (RCA),
64145 (WUI) or
82987 (FTCC)
In witness whereof, the parties hereto, acting through their duly authorized representatives, have caused this Agreement to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written.
Schedule 1
WITHDRAWAL OF THE PROCEEDS OF THE LOAN
1. The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocation of the amounts of the Loan to each Category and the percentage of expenditures for items so to be financed in each Category:
Category Amount of the % of
Loan Allocated Expenditures
(Expressed to be Financed
in Dollars)
(1) Computers, office 600,000 100% of foreign
equipment and expenditures, 100%
furniture of local
expenditures
(ex-factory cost)
and 83% of local