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International and domestic financing allows Fiat to modernise and expand in Poland
Four agreements were signed in Warsaw today between Fiat Auto Poland S.A., Fiat Auto SpA, the European Bank for Reconstruction and Development (EBRD), the Polish Development Bank (PDB) and SIMEST (the Italian public merchant bank). The agreements are to partially finance a capital expenditure plan to be undertaken by Fiat Auto Poland, a company set up by Fiat Auto in partnership with the Polish Treasury in October 1992. Located in the southern area of Bielsko Biala, the company currently manufactures two models, the Fiat 126 and the Cinquecento.
The new investment plan, to be carried out over the next few years, is designed to modernise and expand Fiat Poland's manufacturing operations. The agreements incorporate:
- DM 82.5 million of direct equity investment in the company (EBRD DM 66.0 million and SIMEST DM 16.5 million, giving them approximately 13% and 3% respectively); and
- Medium term loans, totalling DM 206.0 million, consisting of:
DM 140.0 million from the EBRD of which 45 % has been syndicated to a group of European banks, comprising Banca Commerciale Italiana, Credit Lyonnais, Societe Generale, Creditanstalt, ING Bank and Berliner Handels-Und Frankfurter Bank;
DM 66.0 million from a consortium arranged by the PDB with Amerbank, Bank Gdanski, Bank Handlowy International, Export Development Bank, Bank Handlowy S.A., ING Bank, International Bank in Poland Inc. and Investkredit Bank.
DM 17.5 million of the PDB loan will be provided by the European Investment Bank (EIB), representing the first tranche of an ECU 35 million loan approved for the Fiat Auto Poland project, part of a wider agreement between the EIB and the Fiat Group.
Ron Freeman, First Vice President of the EBRD, commented "By participating in this capital investment programme with Fiat, the EBRD can indirectly help to restructure a vital part of the Polish automotive industry."
Wojciech Kostrzewa, President of the PDB, remarked: "The PDB is proud to have helped mobilise not just foreign but domestic financing for Fiat's landmark investment. This testifies to the continued growth of the Polish financial markets."
These agreements, which represent a major contribution to the funding of the programme, also bear witness to the international and local financial community's approval of the measures the Fiat Group is taking in order to expand its automotive operations. At the same time, these agreements confirm the part that the participating institutions can play in supporting the Polish economy.
In 1993, Fiat Auto Poland recorded sales of around DM 1,670 million, selling over 277,000 cars of which over 150,000 were exported, confirmation of the success of the Cinquecento.
Under the new capital expenditure plan various operations will be undertaken over the next 5-6 years to rationalise existing plant, expand its output capacity and improve its environmental and safety standards. It is foreseen that new car models will be introduced in the next 4-5 years.
Aside from the funding supplied by today's agreements, the project will also receive further loans and capital contributions from Fiat Auto SpA.
To date, Fiat Auto SpA has invested DM 437 million in Fiat Auto Poland.
As of 30 April 1994, the EBRD has 34 Board approved projects in Poland, valued at ECU 740 million, of which 21 have been signed.
The PDB consortium of DM 66.0 million represents the largest commercially based syndicated loan organised in Poland to date.
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