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EBRD to invest in Croatian pharmaceuticals company
The first direct corporate investment by the European Bank for Reconstruction and Development (EBRD) in Croatia is to be made in Pliva dd., a Croatian pharmaceuticals company. The US$ 20 million (ECU 15.3 million) loan supplemented by a DM 60 million (ECU 32.9 million) convertible debt investment will increase its capacity to produce Azithromycin, an antibiotic, and support its planned capital expenditure programme. The agreements were signed in Zagreb today.
Ron Freeman, First Vice President of the EBRD, said: “EBRD is making its first substantial direct investment in a Croatian company which produces a world class product and which is in the process of being privatised. It will give Pliva the opportunity to show that it can thrive in an international public company environment and demonstrate that Croatia has attractive opportunities for foreign investment. The EBRD hopes to encourage private share ownership in Croatia and the development of the Zagreb Stock Exchange and is looking forward to becoming a shareholder of Pliva".
Zeljko Covic, Chairman and CEO of Pliva, commented: "We are delighted to welcome the EBRD as a lender and prospective shareholder. EBRD has been extremely constructive in contributing to the proposed privatisation of Pliva. We expect that the confidence that has been shown in Pliva by the EBRD will soon be matched by other international investors and that the benefits of the investment will be appreciated both inside and outside Croatia".
Pliva, a well established and diverse pharmaceuticals company, plans to construct a new plant which will produce Azithromycin (an advanced macrolide antibiotic) and other antibiotics. Azithromycin is the product of Pliva's own research and is a drug for which it holds the world-wide patent. Azithromycin is licensed to Pfizer in the United States, which sells it under the brand name “Zithromax”, and it is also sold in eastern Europe under the name “Sumamed”. It is used to treat infections of the upper respiratory tract. Its advantages are in the short course of treatment and reduced side effects.
The agreement signed today will not only increase Pliva’s production capacity but will also benefit the environment by moving production out of the centre of Zagreb.
The Government of Croatia recently announced its intention to pass majority ownership of the company into private hands. To this end it appointed Zagrebacka Banka and Union Bank of Switzerland to coordinate a domestic and international public offering of shares, which is expected to occur in the first half of 1996.
The EBRD convertible debt element will provide funds for specific capital expenditure projects and will be converted into equity when the company is privatised. After conversion the EBRD expects to have an 11 per cent stake in the equity of Pliva. It is anticipated that the convertible debt will act as a catalyst for foreign investors to support Pliva’s privatisation.
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