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EBRD financing lifts the spirits of Bulgarian wine industry
Over the last fifteen years, Bulgaria has developed into one of the world's major wine exporters, becoming the sixth-largest exporter of wine in volume terms. In support of the largest private sector investments in this country, the European Bank for Reconstruction and Development (EBRD) is providing funds of US$ 30.5 million (ECU 27.7 million) to Domaine Boyar AD (DB), a Bulgarian wine producer. The investment consists of a US$ 28.5 million (ECU 25.9 million) loan and a US$ 2 million (ECU 1.8 million) equity investment.
Olivier Descamps, Director of the EBRD's Bulgaria team, said: "By supporting the recent privatisation of two wineries in Bulgaria, the project is in keeping with the EBRD's strategy of encouraging the development of large export-oriented enterprises through debt and equity investments." Hans Christian Jacobsen, Director of the Bank's Agribusiness team, added: "This project will contribute significantly to the long-term development of the Bulgarian wine sector, in particular at the vineyard level, while substantially improving the productivity, product quality and competitiveness of these wines."
Margarit Todorov, President of Domaine Boyar, added: "The Bulgarian wine industry is undercapitalised and investment is necessary to respond to the success of Bulgarian wine in the West. This project will help to introduce modern technology, make a dramatic improvement in the quality and efficiency of wine making, upgrade packaging and introduce a sophisticated marketing approach. The project will also have a positive impact on the development of vineyards in Bulgaria, which have deteriorated over the past few years largely due to lack of capital."
The project aims to increase DB's wine production capacity from 27,000 tonnes of grapes crushed in 1997 to 65,000 tonnes by 2002 through the modernisation and expansion of its two existing wineries, Vinprom and Vinis, and through the construction of a greenfield winery. It will also secure the supply of high-quality grapes and introduce new reliable wine processing technologies, which currently do not exist in Bulgaria. In addition, the project will help the company to achieve higher operating margins by improving the quality of products and will increase employment in the local agribusiness sector.
The EBRD's loan and equity investment will partly finance the capital investments and working capital requirements associated with the project. Additional financing will be provided by Baring Central European Investments B.V., the Dutch wine trader Baarsma and Boyar International Limited (BI) in the form of equity. Part of the EBRD loan will be syndicated to ING Barings. The total cost of the operation is US$ 61.5 million (ECU 55.9 million).
Domaine Boyar is a subsidiary of Boyar International Limited, the leading Bulgarian wine trader in the United Kingdom and a leading trader in Western Europe. Created by Mr Todorov in 1992, BI increased its sales from 1.3 million cases during its first full year of operation to more than 5.5 million cases in 1997.
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