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EBRD and UBS lead first international syndicate for Slovenia's largest private sector company
Slovenia's largest private sector company, Poslovni sistem Mercator d.d. (Mercator), is to benefit from a DM 140 million (ECU 75 million) financing package that the European Bank for Reconstruction and Development (EBRD) has arranged jointly with Union Bank of Switzerland (UBS) to finance the construction of new supermarkets and hypermarkets as well as the refurbishment of around 100 existing stores.
"The EBRD is fully committed to providing term financing required by Slovenian companies to restructure their activities over the coming years," said Olivier Descamps, Director of the EBRD's Slovenia Team. "This is the first instance of such a transaction and also the largest EBRD project so far in the private sector in Slovenia."
The President of Mercator's Management Board, Kazimir Zivko Pregl, said: "Mercator had a challenging time in 1996. Newly privatised, the management needed to transform the company quickly. Helped by both the EBRD and UBS, either directly or through the EBRD's Turnaround Management Programme's team of industry specialists, we were able to put together a comprehensive business plan and a complex funding arrangement. As a result, Mercator's credibility among customers and shareholders will have been enhanced, leading the way to Mercator's sustainable competitive advantage in the market."
As well as expanding its stores, Mercator is also restructuring its retail and distribution activities, introducing new management information and electronic sales systems, enabling it to provide its customers with a more efficient and quality-driven service.
Of the DM 140 million package, the EBRD is providing DM 60 million, with six participating banks contributing the remaining DM 80 million. "The fact that the EBRD and UBS were able to syndicate a large portion of the loan reflects the quality of Mercator and the willingness of international banks to accept, for the first time, long-term exposure to private Slovenian companies," said Noreen Doyle, the EBRD's Deputy Vice President for Credit and Commercial Co-Financing. The syndicate banks are UBS (joint arranger), Bayerische Vereinsbank, Dresdner Bank Luxembourg, Kredietbank, Creditanstalt and Société Générale.
Peter Hebeisen, Head of Corporate Banking in Central and Eastern Europe at UBS, said: "It was our objective to support the promising development and future strategy of Mercator from an early stage and to bring this first-time borrower, one of the most recognised brands in Slovenia, to the international credit market. We are pleased that we have achieved this by forming a small group of strong international banks. The project is an excellent example of a former state-owned enterprise moving towards a market-oriented company."
Mercator operates in both the domestic retail and wholesale markets. After full privatisation in October 1995, the management began to modernise and restructure the company. Mercator currently operates over 650 stores throughout Slovenia as well as a number of high-quality food processing companies. Its annual total turnover is in excess of DM 1.3 billion. The financing package will be the 18th project signed by the EBRD in Slovenia, with EBRD commitments there totalling ECU 338 million.
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