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Slovenian hardware company Merkur hammers out unique new financing deal with the EBRD
A new foundation for Slovenian domestic industry was laid today as the European Bank for Reconstruction and Development (EBRD) signed a unique DM 23.6 million (ECU 12 million) equity investment, in the form of a capital increase, to acquire a 19 per cent stake in a private Slovenian company, Merkur d.d., the largest Slovenian hardware supplier for industry, craftsmen and consumers.
The investment is one of the largest capital increases in a non-financial Slovenian company to date, and the Bank's first direct equity investment in Slovenian domestic industry. Setting a major new precedent, the EBRD investment also prompted large Slovenian institutional shareholders to subscribe DM 10.2 million in additional equity in Merkur.
"The next stage of development in Slovenia will depend on the ability of domestic companies, such as Merkur, to attract significant finance, compete in European markets and demonstrate strategic management," said Olivier Descamps, Director of the EBRD's Slovenia Team. "We believe Merkur is an exemplary company, and the EBRD can play a major role in advancing the needs of like-minded Slovenian enterprises."
The project will also generate DM 30 million in additional loans to be signed by year end with Société Générale and Deutsche Investitions- und Entwicklungsgesellschaft to finance investments and permanent working capital requirements. The Merkur co-financing package opens a new window of opportunity for Slovenian companies to access capital through the EBRD, together with Slovenian investment funds and foreign investors.
With sales of DM 446 million in 1996, Merkur specialises in wholesale and retail sale of technical products, construction and installation materials, do-it-yourself and electrical goods, as well as ferrous metallurgy. The company operates a network of 30 retail outlets across the country, and will build four new stores in Ljubljana and Maribor by the year 2000 to meet the substantial demand for its products from Slovenian consumers.
"The EBRD has chosen to support our strategy to maximise growth potential and profitability, while expanding our retail network in the domestic market," said Jakob Piskernik, Chief Executive of Merkur. "We fully expect Merkur's shares to be listed on the Ljubljana Stock Exchange in the second half of 1998."
Since 1991, the EBRD has concluded 20 projects in Slovenia worth ECU 346 million including today's investments in Merkur and Aquasava, a Slovenian textile company.
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