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EBRD to help distressed but viable Slovene companies
Medium-sized Slovene companies that have financial difficulties, but which can, with some capital injection, become viable, will be the target of the European Bank for Reconstruction and Development (EBRD)'s Slovene Special Restructuring Programme. By two framework agreements signed this week, the EBRD is committed to making equity investments of up to ECU 30 million towards the stabilisation and restructuring of about 15 Slovene enterprises.
Ron Freeman, First Vice President of the EBRD, said: "This is a turnaround venture capital fund customised to meet Slovenia's current needs. It is the only programme in the country to reach a segment of enterprises which, to date, has had limited access to fresh capital and management assistance. The project will fill a void in enterprise restructuring and privatisation and help bring Slovenia another step forward in its transition to a market economy."
The EBRD will make its equity investments through two special purpose investment vehicles structured as holding companies, to be set up in partnership with the Development Fund of the Republic of Slovenia (Sklad) and Finor, a financial holding owned by Splosna Banka Koper, a Slovene commercial bank. During the design and preparation of the project, the EBRD has developed a strong working relationship with these local partners and gained a thorough understanding of the characteristics of Slovenia's industry, and its current problems and restructuring needs.
The EBRD's equity will be invested in medium-sized companies, which will typically have about 500 employees and annual sales ranging from ECU 10 million to 15 million. These companies are expected to receive investments ranging from ECU 1 million to 3 million.
In addition to investing equity, the programme will take a hands-on approach to the stabilisation and restructuring of the companies, providing them with strengthened governance and technical support in product development, marketing, financial reporting and management. To this end, technical cooperation funds to leverage the EBRD's equity and enhance its impact will be provided by several donors, including the European Commission's PHARE programme which has already committed significant amounts.
The two holdings will be managed on behalf of the shareholders by a team of senior Western and Slovene managers and turnaround professionals with a solid track record. This team will be resident in Slovenia and responsible for the operational management of the programme throughout its major phases of screening investment candidates, developing turnaround plans, taking control, implementing governance and restructuring measures, providing advice, and ultimately exiting from the investment.
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