Export guarantee agency expects payout

TALLINN - In the worst-case scenario, the Estonian state export guarantee foundation Kredex would have to pay 200 million kroons (12.8 million euros) before the end of the year to cover the costs of a private sector development project in Kiev, Ukraine, that has run into trouble and which is operated by businessman Hillar Teder, reports Postimees Online. In 2009, Kredex issued export guarantees of 200 million kroons to Teder’s company, Expert Capital, for three of the four projects that the company requested guarantees for.

The plans for the project, called Dneprovskaya Pristan, on Expert Capital’s homepage, appears impressive: a small peninsula by the Dnepr where a large shopping center, residential apartments and a yachting marina were to be built. However, when the economic crisis hit, people’s wallets locked shut.

Kredex manager Andrus Treier said that the export guarantee talks started in the middle of 2008, and by the end of the year the decision was made to grant the guarantee at its full limit, since Teder was known as an ‘expert’ at opening supermarkets in Russia and the former CIS states.

Estonian companies received work in designing and building the Dneprovskaja Pristan shopping center. Treier checked upon the project personally last summer and currently there is a representative of Kredex in Kiev. The problem now is whether it is possible to find rent-paying tenants for the project’s ill-timed 68,000 square meter development.
Construction companies have been paid with the help of banks, who now expect to be repaid as well. Treier said that the first payment date is in March, and by the end of the year the full 200 million kroon guarantee must be covered. If Expert Capital cannot find the money, Kredex will have to step in and cover the payments.

Treier said that the risk of this happening is quite substantial, but he still believes the project could be a success since there is no other comparably “good project” in Kiev.
So far, Kredex has suffered minor financial damage: by the end of 2008, the foundation had allocated 26.2 million kroons for possible losses. The portfolio of export guarantees stood at 350 million kroons at the end of last year.