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EBRD and Société Générale Romania Fund to purchase a 51% stake in Arctic S.A.
The European Bank for Reconstruction and Development (EBRD) and Société Générale Romania Fund (SGRF) will purchase a controlling stake in Arctic S.A. (Arctic), a leading Romanian refrigerator manufacturer, from the State Ownership Fund (SOF) of Romania. As part of the transaction, the co-investors will implement comprehensive modernisation investments totalling more than US$ 20 million (ECU 18.5 million) to upgrade the company's manufacturing facilities. With 49 per cent of its existing stock already listed on the Bucharest Stock Exchange prior to the transaction, the share purchase by the co-investors will convert Arctic into a fully privatised company.
"This transaction demonstrates to the international markets that financial investor driven privatisation is possible in Romania," said EBRD President, Jacques de Larosière. "The project provides a solid base for the long-term competitiveness of Arctic, both domestically and in export markets, and will help generate foreign exchange for the country."
The joint EBRD and SGRF investment consists of the acquisition of the 51 per cent shareholding from the State Ownership Fund. In addition, the co-investors will carry out an equity increase for the funding of modernisation investments. This will be complemented by a long-term loan of up to US$ 8.1 million (ECU 7.5 million) by the EBRD. Deutsche Investitions- und Entwicklungsgesellschaft (DEG) is looking at the possibility to provide additional long-term loan financing of around US$ 4 million (ECU 3.7 million).
"With a recognised brand name, Arctic represents one of the best quality enterprises emerging in Romania," stated Cella Eftimescu, Director of Société Générale Romania Fund. "We will rely on current management for project implementation and plan to strengthen corporate governance. Arctic is a "tier-one" company listed in the Bucharest Stock Exchange and the co-investors will aim to make the company's disclosure and corporate governance policy a benchmark for the Romanian market."
Sorin Dimitriu, President of the SOF, said: "This is a very important transaction at a critical stage of our privatisation efforts. This pilot transaction helps to strengthen relations between the State Ownership Fund and the financial investor community and will provide additional impetus to accelerate Romania's privatisation programme."
With a significant share of the domestic refrigerator market and substantial exports to the European Union, Arctic was one of the first companies in central and eastern Europe to introduce environmentally friendly CFC-free refrigerators in its product range.
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