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Czech public transportation to be improved by EBRD loan and guarantee facility
A long-established Czech producer of city buses and intercity coaches will fund a modernisation programme for its buses and coaches and for its manufacturing operations through a CZK 1 billion (ECU 30 million) loan and guarantee facility agreement signed today in Prague with the European Bank for Reconstruction and Development (EBRD). Karosa is a leader in its domestic market and exports approximately 30 to 40% of its production per year. It is among the 80 largest Czech enterprises.
Ron Freeman, First Vice President of the EBRD, said: "This project will assure the competitiveness and independence of a well-recognised Czech automotive product. It will also improve the quality of public transportation vehicles, which are important to the infrastructure of the Czech Republic, through the introduction of international technology and expertise in partnership with Renault VI".
The loan and guarantee facility are to Karosa a.s., a joint-stock company organised under Czech law, in order to finance the modernisation of its products and the acquisition and installation of new equipment at its bus and coach manufacturing plant in Vysoké Mýto.
Up to CZK 250 million (approximately ECU 7.5 million) of the facility may be syndicated; the balance of up to CZK 750 million may be provided in the form of a loan or in the form of a guarantee for Czech credit lines to Karosa. Renault VI acquired 34% of Karosa's shares via a capital increase a the end of 1993 for CZK 444 million A subscription agreement providing for a CZK 222 million (ECU 6.7 million) equity investment in Karosa was entered into by the Bank in May 1994. The EBRD equity investment represents 17 per cent of the shares of Karosa.
Karosa s.p., founded in 1895 under the name Sodomka, was nationalised in 1947 and renamed Karosa. After the Velvet Revolution, Karosa s.p.was included in the second wave of companies to be privatised by the Czech government at the end of 1993. In this context Karosa s.p. was transformed into Karosa a.s. and, after negotiations with several candidates, a privatisation and joint-venture agreement was concluded between the Ministry of Privatisation, Karosa and Renault VI.
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