Magadi Soda: loan to finance rail upgrade

Magadi Soda Company has signed a medium term loan facility of KES 1.675 billion (USD 23.6 million) with Standard Chartered and Barclays Bank.
Standard Charted Bank arranged the loan, which is fully u…

Magadi Soda Company has signed a medium term loan facility of KES 1.675 billion (USD 23.6 million) with Standard Chartered and Barclays Bank. Standard Charted Bank arranged the loan, which is fully underwritten by both institutions. The funds will be used primarily for new locomotives and rail wagons to transport soda ash from Magadi to Mombasa. The company is Africa“s largest and Kenya“s only producer of soda ash. Speaking at the signing ceremony, Magadi Soda Managing Director, Mr James Mathenge said the deal is a milestone for the company, which started with the capacity expansion in 2004 and culminates with the commissioning of the new rail equipment. Forty four hopper rail wagons imported by the company arrived at the port of Mombasa aboard MV S Pacific. Magadi Soda Rolling Stock Manager, Mr Patrick Kivihya Aligula said the wagons will be used mainly for carrying soda ash. “We plan to import 104 hopper wagons”, he said. Mathenge said the company plans to purchase eight locomotives as well as introduce three extra locomotives to cope with increased soda ash production. In December 2005, Tata Chemicals Limited acquired a 63% stake in Brunner Mond Limited, Magadi“s UK parent company. The remaining equity was acquired in February 2006, making Magadi Soda a fully owned subsidiary of Tata Chemicals Limited. The Tata Group is India“s best-known industrial group with an annual turnover of USD 17.8 billion, equivalent to 2.8% of India“s Gross Domestic Product (GDP). The expansion program and the new rail equipment will improve efficiencies allowing the company to consolidate its position as the lowest cost soda ash producer in the world and open up new markets. Magadi took responsibility for operating its own railway line in 1995 and it is now a strategic component of the firm“s distribution. The need to acquire new rolling stock is part of Magadi“s capacity expansion program, which is almost complete. The company exports 95% of its products to its main markets in South East Asia, India, Africa and the Middle East.