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First deal made under Bank's Yugoslav working capital facility
The European Bank for Reconstruction and Development today agreed to lend Yugoslav car tyre company Tigar Pirot €4 million - the first commitment made under an innovative Working Capital Facility set up last month.
The facility can provide up to €65 million of working capital financing to large state or socially owned or private companies in the Federal Republic of Yugoslavia which otherwise cannot obtain capital from the local banking system.
This first project financed under the facility was signed at the Bank's headquarters by EBRD President Jean Lemierre and Dragan Nikolic, CEO of Tigar Pirot. Yugoslav Deputy Prime Minister Miroljub Labus attended the signing ceremony. Mr Lemierre said the deal would be an example to show investors that many of the larger Yugoslav businesses are well managed and competitive internationally.
Tigar Pirot generates about €100 million in annual sales from the production of high-quality tyres and exports account for 55 per cent of sales. The EBRD's financing will enable the company to improve efficiency and quality, and use more of its existing capacity.
The EBRD has identified a number of other companies that could receive working capital through the facility framework, and expects to commit a significant amount of the facility over the next 12 to 18 months. At the same time, the governments of the Federal Republic of Yugoslavia and its constituent republics, Serbia and Montenegro, have committed under the framework agreement to implement policy reform supportive of privatisation and foreign direct investment.
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