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EBRD finances shoe production in Russia and Moldova
High quality shoe production in the Russian Federation and Moldova will be increased significantly following the signing of two agreements today, for a total of US$ 18.3 million, between joint ventures sponsored by the Spanish industrial group, Kelme, and the European Bank for Reconstruction and Development (EBRD).
David Hexter, Deputy Vice President of the EBRD, said: “This coordinated approach underlines the EBRD's commitment to provide financing on a wider scale to international firms undertaking expansion programmes through multiple projects in the EBRD's countries of operations. We also welcome the valuable contribution of the Spanish Export Credit Agency, Banco Bilbao Vizcaya, Instituto de Crédito Oficial and Compañía Española de Financiación del Desarrollo (Cofides), which are joining us for the first time”.
US$ 11.0 million (ECU 9.1 million) of the EBRD's loan will go to the Russian joint venture, AO Bashkortostan-Kelme, a company set up by Kelme, the State Property Committee of the Republic of Bashkortostan (southern Russia) and other local industrial and financial entities. The remaining US$ 7.3 million (ECU 6.0 million) is for the Moldovan joint venture, Ascom-Kelme. Ascom is one of the leading private trading companies in Moldova.
José Quiles Navarro, President of Kelme, said: “We strongly believe in the potential of the former Soviet Union and feel that this market can best be served with locally manufactured high-quality products”.
Both companies will manufacture a large variety of high-quality sports and leisure shoes, primarily for the CIS and eastern European markets which have strong growth potential.
EBRD financing will be used to buy state-of-the-art production equipment and for working capital purposes. In addition to the technology transfer, over 1,900 new jobs will be created in areas of high unemployment, and the projects are expected to stimulate demand with the local suppliers of leather and other materials required for the production of shoes.
An additional US$ 18.6 million has been jointly committed by Banco Bilbao Vizcaya (BBV) and Instituto de Crédito Oficial (ICO) with export credit coverage provided by Compañía Española de Seguros de Crédito a la Exportación (CESCE). In addition, Cofides, a Spanish governmental agency specialised in the promotion of Spanish investments abroad, will refinance a subordinated loan provide by Kelme to the Russian joint-venture.
INSERVEX, the business advisory arm of BBV, acted as adviser to Kelme and the joint ventures.
The Kelme Group, Spain's leading manufacturer of sports and leisure shoes as well as sports clothing, had a consolidated turnover of approximately US$ 75 million (fiscal year 1994). Founded in 1966, Kelme has continually expanded its market presence, initially in Spain and since the late 1980s outside its home market.
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