EUR 6 million syndicated secured long-term loan to Frontex International, the third largest nonperforming loan (NPL) asset manager in Bulgaria.
The project provides finance to Frontex International in support of their expansion of NPL purchases from financial institutions, telecoms, other utility companies and other Bulgarian originators. It will allow the company to extend the maturity of and diversify the sources of its funding base.
The transaction is the first syndication to an independent NPL asset management company in Bulgaria and will (i) support Frontex in further expanding its NPL purchases from financial institutions in Bulgaria, thereby contributing to the development of a strong and efficient NPL market, facilitating new lending to the real economy by the selling FIs and allowing both corporate/SME and retail debtors to become economically active again and (ii) introduce a new borrower asset class to international investors.
FRONTEX INTERNATIONAL EAD
Frontex is a Bulgarian debt servicing company, focused on the purchase of overdue receivables (SME and retail loans, telecom and utility bills), i.e. NPLs, from Bulgarian originators as well as collection of NPLs on behalf of Bulgarian originators for a fee. The company was established in 2009 by AG Capital, the largest group offering real estate related services in Bulgaria in order to provide solid financial backing for sustainable development in the acquisition of portfolios, as well as offering flexible debt collection solutions. In 2013, Emerging Europe Accession Fund (EEAF) managed by Axxess Capital acquired a majority stake in the company. EEAF's major investors are EBRD, EIF, DEG, BSTDB.
EBRD Finance Summary
EUR 6 million long term secured loan to be syndicated to co-lenders out of which the EBRD will be providing up to EUR 3 million.
Total Project Cost
Environmental and Social Summary
Categorised FI. Frontex's collection practices are in compliance with European standards for collection practices and data protection. Frontex is a member of the Association of Collection Agencies in Bulgaria (ACAB) although Frontex's code of conduct goes beyond that required by ACAB. Frontex are compliant with the Bank's Performance Requirements (PR) 2 and 4. SME NPLs will be included in this new transaction and Frontex will need to develop necessary environmental and social risk management, in line with PR 9. Frontex will need to continue to report annually on their compliance with the EBRD's PRs 2, 4 and 9 and to confirm their continuing compliance with EU standards and Bulgarian ACAB requirements for their debt collection and data protection.
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