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Loan agreement signed

Date: 5/25/2015 10:00:00 AM
HŽ passenger transport limited liability company, HŽ infrastructure limited liability company and HŽ Cargo limited liability company signed a Loan agreement with the representatives of the International Bank for reconstruction and development (IBRD) in purpose of financing a Project of sustainable development of Croatian railroad sector.

World Bank loan agreements, in the amount of 163,5 million Euros, were signed at the Ministry of finance with three railroad companies – HŽ passenger transport, HŽ infrastructure and HŽ cargo. The agreement was on behalf of the World Bank signed by CEO for Croatia Carlos Pinerua, and on behalf of the Republic of Croatia by minister of finance Boris Lalovac.

The signing of the agreement was witnessed by the minister of transport Siniša Hajdaš Dončić, president of Board of HŽ PP Dražen Ratković, president of board of HŽ infrastructure Renata Suša and president of board of HŽ Cargo Danijel Krakić. Minister Hajdaš Dončić stated at this event that railroad companies are with this agreement being awarded with most favorable loans:

- These loans will enable added optimization of business processes to our railroad companies, they will also be helpful in regard to refinancing of adverse loans awarded in the past with steep interest rates, and will serve for new investments important for survival of Croatian railroad system. These loans have as a goal a decrease of future subsidies granted by the state. On an annual level, each of these companies will because of the awarded loans achieve a 75 to 85 million kunas of savings. - emphasized minister Hajdaš Dončić.

Three loans awarded to companies HŽ infrastructure, HŽ passenger transport and HŽ Cargo, have an effective interest rate of 0,44 to 1 percent, depending on maturity. A loan of 43 million Euros intended for HŽ passenger transport has a final maturity deadline of 18 years, including the grace period of three years. 41,5 million Euros awarded to HŽ Cargo have a final maturity deadline of 20 years, including a grace period of five years, and the loan intended for HŽ infrastructure amounts to 79 million Euros with a final maturity deadline of 10 years, including the grace period of three years.

In order to help with future reform of Croatian railroad sector, the Project of sustainable growth of Croatian railroad sector in Europe will help the three railroad companies advance their operational efficiency and financial situation, so that the latter can give better services in a more financially sustainable manner. The project complements great investments in infrastructure on international corridors financed by EU because it is directed towards an overall restructuring of sectors and sustainability of public companies, which is in accordance with the Government EU liabilities. The project will also help the Department of maritime affairs, transport and infrastructure in coordinating and managing the reform of railroad sector.

- We are extremely pleased to support the Government of Republic of Croatia in the growth of a financially sustainable railroad sector which could be competitive on a demanding EU market and could help Croatia to increase its role as an important traffic route for central and southern Europe. Furthermore, the project will enable the railroad operators to use the infrastructure financed by EU funds more efficiently, to preserve public funds for investments and to decrease the need for subsidized business. - said Mamte Murthi, regional director of World bank for central Europe and Baltic countries while signing these three World bank loan agreements intended for companies of Croatian railroads.

- Furthermore, the project will help companies with their implementation of restructuring plans giving them the ability to invest in critical bottlenecks in the railroad infrastructure, as well as safety measures, modernization of IT systems, renewal of the vehicle fleet and completion of dividing the property within the railroad sector. Also, it will provide support to afflicted employees by ensuring funds for severance payments, education and professional retraining – highlighted Murthi.