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Leading Georgian household brand expands with EBRD loan
The household name of Georgia's "Borjomi" mineral water is to make a comeback. Financed by a US$ 10 million (ECU 8.9 million) six-year secured loan from the European Bank for Reconstruction and Development (EBRD), the Georgian Glass & Mineral Water Co. N.V. (GGMW) will help revitalise Georgia's mineral water and glass bottle industry.
"This is the first EBRD financing of a private sector industrial project in Georgia," said Olivier Descamps, Director of the EBRD's Georgia team. "By providing GGMW with a long-term debt facility, which up to now has not been available to Georgia's industrial sector, the EBRD will enable the "Borjomi" brand to be restored to its former market position as the leading mineral water in the region. It will also send a powerful signal to potential investors that private projects are feasible in Georgia. We expect the impact in terms of incremental flow of foreign direct investment into Georgia to be considerable."
The EBRD's loan will help modernise the Borjomi bottle-making and water bottling facilities, improve productivity and energy efficiency and bring environmental practice up to world standards. In addition to reviving the former traditional markets of the "Borjomi" brand, such as Moscow, St Petersburg and Kiev, GGMW also intends to launch the brand in new ones. With the involvement of experienced Western entrepreneurs, the project will help introduce higher standards of corporate governance in Georgia as well as transferring market-oriented skills to the facilities at Khashuri and Borjomi.
GGMW is owned by B.V. Venture Capital Investors, an international venture capital fund with over US$ 500 million of capital invested; Tbilisi Business Centre, a leading Georgian group of companies comprising TBC Bank, an existing EBRD client; Barings' First NIS Regional Fund, in which the EBRD is an investor; the International Finance Corporation and other private investors. Its management has extensive experience both in the region and the mineral water industry, as well as experience of start-up ventures. "The Borjomi mineral water brand has existed for nearly 100 years and therefore public awareness within the former Soviet Union is higher than for any comparable brand name. It has the real potential to become the "Perrier" of the region," said Bob Meijer, Chairman of the Board of GGMW.
Total production of 0.5 litre bottles of Borjomi mineral water is expected to increase from 25 million in 1996 to 100 million by the year 2000. GGMW also plans to begin production of 0.7 litre glass bottles for the wine and other beverage industries and to introduce other mineral waters in plastic (PET) bottles.
Existing EBRD projects in Georgia cover the financial sector and infrastructure. Including the loan to GGMW, total commitments are approximately ECU 50 million.
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