Drobe Wool

Location:

Lithuania

Project number:

5624

Business sector:

Manufacturing and Services

Notice type:

Private

Environmental category:

B

Target board date:

05 Oct 1999

Status:

Completed

PSD disclosed:

12 Aug 1999

Project Description

A US$ 21.3 million (EUR 20.7 million) programme to enable Drobe to privatise, restructure and modernise its manufacturing facilities, thus strengthening the company’s market position in western and central Europe and the Commonwealth of Independent States.

The project involves the privatisation, restructuring and modernisation of Drobe’s manufacturing facilities and consolidation of its operations from four production sites to two. The project will help to revitalise a major player in the Lithuanian textile industry and a significant exporter and earner of hard currency, which has been successful in redirecting its operations to EU markets.

Transition Impact

The project will have a significant impact on the transition by:

  • extending private ownership in the economy through support for privatisation, restructuring and modernisation of a major local company;
  • demonstrating ways of achieving successful restructuring and privatisation;
  • developing skills through the use of new technology and know-how;
  • improving standards in the Lithuanian textile industry;
  • improving corporate governance through the Bank’s representation on the Board of the company.

The Client

Drobe was founded in 1920 and is one of the largest textile mills in Lithuania, with 2,300 employees. The company produces and sells about 5 million metres of worsted (pure wool and wool blend) fabrics per year. Since 1991, Drobe has established a significant presence in EU wool-worsted markets (75 per cent production for EU markets).

EBRD Finance

EBRD financing consists of a US$ 7.3 million (EUR 7.0 million) loan to Drobe and a US$ 2.5 million (EUR 2.5 million) equity investment in the company. It is expected that the EBRD’s investment will be co-financed with an equity investment fund and with funding from another international financial institution and a local bank.

Project Cost

US$ 21.3 million (EUR 20.7 million)

Environmental Impact

The project was screened B/1, requiring an environmental audit of the existing facilities and analysis of the proposed modernisation. Independent environmental due diligence, undertaken by consultants in accordance with EBRD requirements, did not identify any significant environmental issues associated with the company's operations.

The project is in compliance with all relevant Lithuanian and EU legal requirements. There is no record of any fines, penalties or enforcement action against the company.

An Environmental Action Plan (EAP) has been developed by the company on the basis of the findings and recommendations of the environmental audit. The EAP sets out details of future action to improve environmental health and safety management systems. Most critical planned investments involve the improvement of hazardous waste storage and handling. Significant energy efficiency and energy savings will be achieved by the modernisation of the Drobe’s facilities.

Technical Cooperation

Technical cooperation for project preparation was supported by Italy, Denmark and the United Kingdom. Earlier TC support for the company was provided by Australia and the Baltic Technical Assistance Fund, which is sponsored by the Nordic countries.

 

Business opportunities

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