The Duna Aszfalt redeems the bonds issued under the GED Africa project

The Duna Aszfalt is redeeming the bonds issued for the GED Africa project in order to eliminate the risk to the Hungarian state – according to a statement issued by the Hungarian company. The company today initiated the voluntary redemption of the bonds linked to the financing of the GED Africa project at EXIM Bank and MFB Bank.

„The aim of the company’s decision is to strengthen the stability of the project’s financing structure, preserve the international economic credibility of Duna Group and Hungary, and ensure the long-term and uninterrupted continuation of the Kasomeno-Mwenda infrastructure development project”

– the statement reads.

The background to the large-scale infrastructure development in Africa we recently provided a comprehensive overview in this article.

The process may be completed within ten working days

The Duna Aszfalt announcement also sets out the details of today’s decision, stating that has sent the necessary notification to the relevant financing institutions. According to Duna Aszfalt Zrt.’s expectations, the process may be completed within approximately ten working days, in accordance with the contractual terms.

The construction company intends to redeem the bonds in accordance with the terms of issue, on standard terms, at face value and with payment of interest accrued up to that date.

They take note of the Hungarian State’s position

The statement emphasises that, when designing the financing structure, the focus of Duna Group’s international growth strategy was on the simultaneous development of several overseas markets. In recent times, the group’s strategic focus has shifted towards Africa, and it has therefore reallocated its financial resources accordingly. This ensures that the financing of the Kasomeno-Mwenda Project remains stable in the long term.

They emphasised that,

The financing scheme in place to date has, in recent times, generated revenue amounting to several billion forints for EXIM Bank and MFB Bank, which are involved in the financing.

However, Duna Aszfalt Zrt. acknowledges the Hungarian Government’s position regarding the state guarantee and, with a view to strengthening the stability of the project and Hungary’s international standing, is therefore proposing a voluntary redemption of the bonds.

They want to send a clear message

„For Duna Group, trust is the foundation of every business relationship” – the press release quoted Attila Kerékgyártó, Chairman of the Board of Duna Aszfalt Zrt.. „When uncertainty arises around a financing arrangement that could adversely affect our company and our relationships with partner countries, it is our responsibility to act. That is why we initiated the redemption of the bonds.”

He emphasised that funding for the project remains secure; however, it is just as important to them to preserve the professional credibility and reputation that Duna Aszfalt Zrt. has built up over more than thirty-five years.

„As a group of companies operating in several countries and employing more than 2,000 staff in Hungary, we have a responsibility towards our employees, our partners and the countries participating in the project. We wish to send a clear message: the Kasomeno-Mwenda Project is on a sound financial footing, and Duna Group will continue to fulfil all its commitments in full in the future.”

– added Attila Kerékgyártó.

Further African infrastructure development projects are also in the spotlight

The statement also explains that the state guarantee would only have resulted in a cost to taxpayers if Duna Aszfalt Zrt. had been unable to meet its obligations. With the voluntary redemption of the bonds, this risk is eliminated; however, the state forfeits future revenue associated with the scheme, such as guarantee fees and revenue from financing.

Duna Group is convinced that the successful international involvement of a Hungarian-owned company also strengthens Hungary’s economic position. The Kasomeno-Mwenda Project is the first infrastructure development project in Africa to be implemented through cooperation between the public and private sectors, alongside Hungarian technical investment. The aim of the project is to serve as a benchmark for other African investments in the future.

„As part of the project, an intensive transfer of knowledge is currently taking place between Hungarian and African experts. The aim of Duna Group is to build on the experience gained and participate in further African infrastructure development projects in the future,” they emphasise. „The company is open to the bond redemption process being completed as quickly as possible, in accordance with the terms of issue.”