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UPDATE 2-AfDB approves loans for Air Cote d'Ivoire Airbus purchase
November 9, 2017 / 9:02 AM / in a month

UPDATE 2-AfDB approves loans for Air Cote d'Ivoire Airbus purchase

* AfDB provides 115 mln euros in loans and guarantees

* Total investments for expansion plan top 250 mln euros

* Some board members had earlier raised questions over deal (Adds quotes, details)

By Joe Bavier

ABIDJAN, Nov 9 (Reuters) - The African Development Bank (AfDB) has approved 98 million euros ($114 million) in loans to help fund Ivory Coast national airline Air Cote d‘Ivoire’s purchase of five new Airbus A320s, the bank said on Thursday.

The loans will contribute to a total investment of 253 million euros that the company says will help Air Cote d‘Ivoire become West Africa’s premier airline and make Ivory Coast’s commercial capital Abidjan the region’s main travel hub.

The AfDB said the deal met several of its main strategic priorities including increasing air connectivity and intra-regional trade in land-locked countries and fragile states.

“Despite recent growth, the aviation market in the West and Central Africa region is the most disadvantaged on the continent and has huge suppressed demand – a situation that has hampered regional growth and integration,” it said in a statement.

Still, while the Abidjan-based lender has participated in loan packages to commercial airlines in the past, some board members had raised questions about the structure of the loans and whether they fulfil the AfDB’s development vocation.

The board of directors delayed a vote on the package last month to allow more time to study and discuss the proposal.

The AfDB financing includes a 51-million-euro sovereign loan, a 43-million-euro private sector loan, and an African Development Fund loan of 4 million euros.

The bank’s support also includes a 17-million-euro partial risk guarantee to ensure the participation of commercial banks, which will contribute 95 million euros.

Thursday’s statement did not name those banks, but according to a document outlining the deal seen by Reuters last month they include specialist bank Investec, which was to contribute $30 million.

“The transaction is the first of its kind to use the leveraging power of the partial risk guarantee for the transport sector in Africa,” the AfDB said.

The Ivorian state owns a 65 percent stake in the airline. Its other shareholders are Air France with a 20 percent stake and private Ivorian investor group Goldenrod, which holds 15 percent.

With its current fleet of 10 planes, Air Cote d‘Ivoire already boasts service to 20 African and five domestic destinations. The additional aircraft will allow it to establish routes to Mauritania’s capital Nouakchott, Bangui in Central African Republic and Luanda, Angola. ($1 = 0.8622 euros) (Reporting by Joe Bavier; Editing by Hugh Lawson)

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