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EBRD loan refreshes Baltic fruit juice company
By providing an eight-year US$ 14 million (ECU 12.4 million) loan to PAS Gutta, based in Latvia, the European Bank for Reconstruction and Development (EBRD) continues to stimulate growth in the country’s private sector. Gutta is one of the Baltic region’s leading fruit juice companies, with substantial cross-border operations, and the EBRD’s investment supports the continuing development of regional ties between the food sectors of Latvia, Estonia and Lithuania. The EBRD will have the option to convert a portion of its loan into shares, and will appoint a member to Gutta’s Board.
"This is the first EBRD investment in a private industrial company in Latvia and the Bank’s first food sector project in the Baltic states," said Hans Christian Jacobsen, Director of the EBRD’s Agribusiness team. "Given its strong brand, region-wide operations and ongoing growth in spite of the region’s economic difficulties, Gutta fits well within our sector investment strategy in the Baltic states. It is equally important that the EBRD will be working closely with other debt and equity investors in Gutta to ensure both adequate capital resources and sound corporate governance for the company."
Nikolai Lovtsov, President of Gutta, commented: "Gutta is delighted to have achieved a significant partnership with such a well-established and respected financial institution as the EBRD. Since 1994, Gutta and its shareholders have managed to establish a very good base for further development of the company. Our primary goals are now to strengthen Gutta’s governance and to put in place a rigorous system of business planning for profitable growth. The cooperation of the EBRD will assist us greatly in these efforts."
The EBRD investment will strengthen Gutta’s long-term capital structure, enabling the company to develop its leading market position in Estonia and enhance its competitiveness in Latvia and Lithuania. The investment will also be used to complete Gutta’s Moscow and Kiev plants to make use of local production in these potentially large markets. Further funds will be used to expand the company in the future as market conditions allow.
Since its creation in 1994, Gutta has manufactured and marketed high-quality juice products at competitive prices in the Baltic states and the Commonwealth of Independent States (CIS). In 1996, Gutta built a modern plant outside Riga to satisfy the increasing regional demand for its products, which include soft drinks and mineral water alongside the company’s core juice and nectar lines.
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