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Cadbury Schweppes plc builds major new factory in Russia with the help of EBRD finance
To finance the completion of a new factory manufacturing Cadbury confectionery products, the European Bank for Reconstruction and Development (EBRD) is extending a US$ 70 million (ECU 56.5 million) loan to Cadbury ZAO, of which US$ 25 million has been syndicated to a group of international banks. The plant is located between the cities of Novgorod and St Petersburg.
Hans Christian Jacobsen, Director of the EBRD's Agribusiness Team, said: "Russia is currently the third largest chocolate market in Europe. By setting up a manufacturing site in Russia, Cadbury will have a strong transition impact on the local economy, not only in terms of skills and technology transfer but also within the retail industry itself with enhanced product access and consistent pricing."
The EBRD has acted as arranger for the syndication, which includes Citibank, Crédit Suisse and ING Bank as the participating banks. Noreen Doyle, Deputy Vice President for Credit and Commercial Co-Financing, commented: "We received strong interest from the banking market for this project, the 14th arranged by the EBRD for a Russian borrower involving commercial banks in the financing. We believe that the success of this financing demonstrates that there is appetite in the commercial banking sector for well-structured projects in Russia which will lead the way for others in this important sector."
The proceeds of the loan will be used to complete the construction, commissioning and operation of a modern confectionery factory. Built to local and European Union environmental standards, the factory will have comprehensive environmental and worker safety management programmes. Located in Chudovo in the Novgorod oblast, the plant is strategically located on the main road and railway link between Russia's two largest cities. Initially, Cadbury's traditional products will be produced while new brands will be introduced to cater for local tastes.
An important component of the project, which has an overall cost of US$ 150 million, is the strengthening of the sales distribution network in Russia. Cadbury will be leasing up to seven warehouses near distribution centres to allow for timely deliveries. Up to 80 per cent of the products are expected to be sold through local distributors. They will be supported by merchandising expertise provided by Cadbury, which is also setting up its own distribution network.
Cadbury ZAO is owned by Cadbury Russia Ltd, a joint venture between Cadbury Schweppes plc and Silbury, an independent distributing company operating in Russia.
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