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MÁV board decides MÁV-TRAKCIO to take out loan for €79.6m engine purchase

The board of state-owned Hungarian railway company MÁV on Thursday decided its traction unit MÁV-TRAKCIO would take out a loan to pay for the €79.6 million purchase of 25 Bombardier engines, MÁV-TRAKCIO told MTI.

The decision must still be approved by MÁV's supervisory board and the transport ministry, but MÁV-TRAKCIO expects to sign the contract for the loan in December. The company said it could finance 48% of the purchase with a loan from the European Investment Bank (EIB) and 52% with the participation of KfW Bank. Both banks have made offers to MÁV-TRAKCIO for a 15-year loan with no principal repayments until June of 2013. The engines would be used as collateral for the loans, making a guarantee, either from MÁV or the state, unnecessary.

MÁV called a tender for 25+25 engines in September 2007. It signed the contract for delivery with Bombardier in November 2008. In the contract, Bombardier is to deliver the first engine within sixteen months from the signing of the financing contract, meaning MÁV-TRAKCIO could have the first one by the beginning of 2011. (MTI-Econews)