To support the privatization of Lithuania's
textile industry, the European Bank for Reconstruction and Development
(EBRD) and the International Finance Corporation (IFC) are providing financing
of US$16.5 million (€17.0 million) to Drobe, one of the largest manufacturers
of pure wool and wool blend fabrics in central and eastern Europe.
The EBRD's financing will consist of a US$9.9 million loan and equity investment,
of which US$7.6 million will be provided from the EBRD's ordinary resources
and US$2.3 million from the EBRD's Financial Intermediary Investment Special
Fund (contribution by the International Cooperation and Development Fund,
Taipei China). IFC's financing will consist of a loan and equity investment
totalling up to US$6.6 million. The EBRD and IFC are both implementing
a wide-ranging program of technical assistance to help the company maximize
the impact of its modernization program.
George Krivicky, EBRD Director for the Baltic states, said: "Support
for the industrial sector and promotion of privatization, restructuring
and sound corporate governance of domestic enterprises is a key EBRD objective
in Lithuania. Funding for Drobe is an example of the Bank's readiness to
provide financing for the privatization and restructuring of successful
local businesses with a strong and dedicated management team and a clear
Edward Nassim, Director for Central and Eastern Europe at IFC, said: "IFC's
participation in this project is a good example of our support for the
resurgence of local entrepreneurship in Lithuania. The project should help
Drobe to build on its demonstrated ability to sell quality products and
to compete in European markets."
By modernizing its manufacturing facilities, Drobe will be able to strengthen
its position in Western markets, as well as in central and eastern Europe
and the Commonwealth of Independent States (CIS). This project will help
to complete the privatization process in the Lithuanian textile industry.
In helping Drobe, the EBRD and IFC are supporting the restructuring of
a sector with significant export potential and a strong tradition in Lithuania.
The Dutch and Finnish governments have supported the project with trust
fund finance administered by IFC. Dutch-financed advisers are providing
supervision and guidance for the project as well as technical support for
detailed implementation of the investment program. Finnish-financed advisers
are assisting Drobe in bringing its accounting and management information
systems in line with international standards.
Other co-financiers to this project include private equity funds managed
by CapMan Capital Management and Vilniaus Bankas. *
The EBRD was established in 1991 following the collapse of communism, to
aid the transition from centrally-planned to market economies in central
and eastern Europe and the CIS. The EBRD is owned by 60 shareholders: 58
countries, the European Investment Bank and the European Community, and
operates with €20 billion in authorized capital. As of 31 December 1999,
the EBRD had signed 22 projects in Lithuania totalling €249 million.
The mission of IFC, part of the World Bank Group, is to promote private
sector investment in developing countries, which will reduce poverty and
improve people's lives. IFC finances private sector investments in the
developing world, mobilizes capital in the international financial markets,
and provides technical assistance and advice to governments and businesses.
*Note to Editors
FinnVenture Rahasto IV Ky and FinnVenture Rahasto V Ky are venture capital
funds with total combined capital of €263.5 million. The funds were established
and are managed by CapMan Capital Management, the largest private equity
company in Finland, with support from major Finnish institutional investors.
Vilniaus Bankas with total assets of US$1.25 billion is the largest bank
in Lithuania and a member of the largest banking group in the Baltic states.