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EBRD commits ECU 263 million to 5 projects (total ECU 806 million) in central and eastern Europe
Following a meeting of the Board of Directors on 16, 17 and 18 December, the
European Bank for Reconstruction and Development (EBRD) today announced it has
committed ECU 263 million to 5 projects in central and eastern Europe. The
total investment in these projects is ECU 806 million. This demonstrates the
ability of the Bank to catalyse other investment in central and eastern Europe.
The Bank approved two loans in the Telecommunications sector. One of them will
bring one million modern telephone lines to Romania and the other will upgrade
the telephone system in Budapest and 1,000 Hungarian villages. The Bank also
approved its second equity investment, in a Hungarian computer company, as
well as two loans to private companies in Poland and Romania.
ECU 142 million loan to Romanian Telecommunications Project
The European Bank approved a loan of ECU 142 million equivalent to Rom
Telecom, the Romanian national telecommunications operator.
The loan, guaranteed by the Romanian government, will have a maturity of 15
years.
The loan will help finance the connection of 600,000 new subscribers and the
replacement of 400,000 worn out subscriber lines. It will help the
construction of a long-distance overlay digital network together with the
expansion of international capacity and local networks.
At the same time, the Bank will provide technical assistance to improve the
management and the efficiency of Rom Telecom, and to facilitate its
transformation into a commercial organization which could be readily
privatized. Rom Telecom is the state owned enterprise formed on 1 July 1991 to
take charge of the telecommunications operations formerly under the Ministry
of Communications.
This investment will help the decongestion of the existing telephone network
and the construction of a network that meets the needs of business subscribers
for long distance services. It will also create local employment opportunities.
DM 185 million loan to Hungarian Telecommunications Company
The European Bank approved a DM 185 million loan (ECU 90 million) to the
Hungarian Telecommunications Company to help finance a modernisation and
expansion programme for Budapest and 1,000 villages.
The loan, guaranteed by the Republic of Hungary, will have a twelve year
maturity.
The Hungarian Telecommunications Company, a state-owned enterprise is the main
telecommunications service provider in Hungary.
In Budapest over a three year period, the project will make it possible to
connect approximately 27,000 new subscribers, help to enhance the efficiency
of the telecommunications system, reduce the congestion of the existing
network and improve the call completion rate. In the rural areas over a period
of five years, the loan will help finance the automation of exchanges and
switchboards serving about 1,000 villages, the installation of approximately
1,200 public coin boxes, the installation of 20,000 new lines and the
connection to the national and international network over a period of five
years.
It will help to reduce the costs of small and medium scale businesses located
outside Budapest thereby favouring decentralisation of economic activity.
Implementation of associated civil works and expansion of the Hungarian
Telecommunications Company's operations will also contribute directly to
employment creation.
US$ 3 million equity investment in Hungarian Hardware, Software & Systems
Company
The European Bank approved a US$ 3 million (ECU 2.3 million) equity investment
in Microsystem Rt, a private Hungarian company which assembles, distributes
and retails PCs, PC networks and develops and sells software for business
applications.
The equity will be used to finance working capital, expand telecom activities,
to increase manufacturing capacity and open additional retail outlets in
Hungary. It will also be used to open the company's first two retail outlets
in the CSFR.
The investment will catalyse international equity inflows into the company.
Microsystem Rt. is currently owned by its management who will remain majority
shareholders after the private placement of equity is completed.
Through the investment, the Bank aims to promote a Hungarian private company
that provides essential and custom-designed business services to both the
public and private sectors.
ECU 23 million loan to Romanian power generation equipment company
The European Bank approved an ECU 23 million loan to GEC Alsthom-IMGB, a
Romanian company to be formed to rehabilitate production facilities for power
generation equipment. The loan will have a maturity of 7 years.
GEC Alsthom-IMGB will be the joint venture between GEC Alsthom Group (formed
by the General Electric Company (UK) and Alcatel Alsthom (France)), and
Intreprinderea de Masini Grele Bucuresti (IMGB), a state owned Romanian
manufacturer of heavy equipment.
The Joint Venture will employ GEC Alsthom technology and expertise to
rehabilitate an existing IMGB plant on the outskirts of Bucharest. The scope
of the activity will be the production of complete modules (turbines,
generators and condensers) for power stations, both for the domestic and
export markets.
The Bank will assist in the financing of an important local manufacturing
capability which will enable power generating equipment to be sourced
domestically. This is instrumental in the rehabilitation of the Romanian
electricity generating and supply industry which will lead to a reduction, in
hard currency expenditure, of both imported equipment and electricity.
Aggregate loan of DM 10.7 million to three Polish cold storage companies
The European Bank approved loans aggregating DM 10.7 million (ECU 5.2 million)
to Janofrost, Krespol and Kujawy-Frosy, three Polish joint ventures created to
build, equip and operate three food processing and cold storage facilities in
Poland.
The loans will help finance the building of the plants in Karas, Laszczow and
Strelno, in central and eastern Poland, the purchase and installation of
equipment and will provide initial working capital.
A commercial bank will cofinance the project. The European Bank's loans will
have a maturity of 5 years.
The joint ventures intend to process, freeze, package and store fruit and
vegetable products purchased from local farmers and will be used almost
exclusively for export.
Each joint venture is between local, private, Polish farmers and
Industriebeteiligungs GmbH (IBG) of Austria. IBG has already completed
fourteen food processing and cold storage facilities throughout Poland.
It is hoped that through the transfer of Western technology, the facilities
will assist Polish agribusiness to produce export-quality products that will
generate hard currency income and to create an efficient market for high
quality produce from Poland's agricultural regions.
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