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EBRD arranges largest ever industrial sector financing in Croatia
Agrokor, the largest food company in Croatia, has agreed a €170 million syndicated loan arranged by the European Bank for Reconstruction and Development (EBRD), which will help the company improve its regional operations and raise its international profile. This is the largest investment of its kind in a Croatian company, consisting of €70 million from the EBRD and €90 million from local and foreign commercial lenders. An additional €10 million is expected to be syndicated to support future regional initiatives by the company.
Agrokor’s key operations are in ice cream, mineral water and edible oil, where in all three cases it has built a large market share among the country’s 4.5 million population, as well as other forms of agribusiness.
Proceeds of the loan will enable Agrokor to refinance and restructure its existing mix of short-term and long-term debt into a more cohesive long-term financing. This will allow the company to initiate a far-reaching strategy to develop its core business and expand into nearby countries, such as through its recent acquisitions in Bosnia and Herzegovina. It will also provide working capital.
Jean Lemierre, the EBRD President, said: "The dynamism of the Croatian economy will depend on the ability of companies, such as Agrokor, to make major breakthroughs in international markets. We are providing long-term financing for the company’s ambitious investment plans, which include building up neighbouring markets in a way that can promote regional cooperation and regional prosperity."
Agrokor plans to build on its leading position in the Croatian market and become the leading regional player in the countries of former Yugoslavia, where its products enjoy strong brand recognition, such as its ice-cream, Ledo. At the same time, Agrokor intends to carry on delivering high-quality products to its customers and to improve the profitability of its operations.
The project constitutes a significant achievement in the syndicated loan market for local businesses throughout the region – not only for the size of the transaction, but also the long term of repayment, which is seven years. The group of banks participating in the transaction includes Privredna banka Zagreb, Zagrebacka banka, RZB-Austria, Hypo-Alpe Adria Bank, Crédit Agricole Indosuez, Rijecka banka and Stedbanka*. The loan replaces an earlier attempt by the company to issue a €150 million Eurobond.
The EBRD recently announced a new strategy for Croatia that aims to support the country’s efforts to reduce the role of the state in the economy, attract private capital and promote sustained growth. The EBRD has played a significant role in promoting Croatia’s transition to a market economy. As of 30 September 2000, the Bank had made commitments to 33 projects involving direct Bank investment of €571 million, and a further €1.7 billion from sponsors and co-financiers. The EBRD has now, across its field of operations, signed 128 investments in the food processing and retail sector totalling more than €2 billion.
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