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 strategic outlook."
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.
