PILSEN, CZECH REPUBLIC, Sep. 25 -- The International Finance Corporation (IFC) today signed a DM90 million (US$64 million equivalent) loan agreement with Plzensky Prazdroj, a.s., the leading brewery of the Czech Republic which produces Pilsner Urquell beer.
IFC's loan, together with long-term Czech crown financing of 1.4 billion provided by a consortium of local banks, will assist Plzensky Prazdroj modernize and expand its main breweries, Prazdroj and Gambrinus; strengthen the company's national distribution system; and restructure part of its short-term debt. Upon completion of the company's investment program, Plzensky Prazdroj is expected to have efficient, state-of-the-art production facilities in Pilsen and a strong financial position.
"Successful macro-economic reforms together with widespread privatization in the Czech Republic have spurred an unprecedented level of private sector growth, creating an increasingly competitive market environment," said Mr. Wilfried Kaffenberger, IFC's Vice President for Operations. "Many recently privatized Czech companies, however, need long-term financing to modernize, expand, and strengthen their balance sheets in order to compete more effectively in domestic and export markets. We hope that the IFC investment in Plzensky Prazdroj will set an example and encourage an increased flow of international long-term financing to Czech companies."
This is IFC's first investment in a wholly owned Czech company and is the natural progression of the Corporation's pioneering work in privatization in the Czech Republic which began in 1990. IFC's current strategy in the Czech Republic is mainly to assist locally owned companies which are fundamentally sound yet still in need of long-term resources for modernization and restructuring.
The financing package signed today comprises a loan of DM45 million (approximately US$32 million equivalent) for IFC's account, a syndicated loan of DM30 million (approximately US$21 million equivalent) for the account of participating banks, and a loan for IFC's account of DM15 million (approximately US$11 million) convertible into shares of Plzensky Prazdroj. Participating banks include, Bayerische Vereinsbank, Creditanstalt, and Deutsche Bank.
IFC is a member of the World Bank Group and is the largest multilateral source of equity and loan financing for private sector companies in developing countries.
