The bank is providing a €5.5m mezzanine loan to Fama, Bulgaria’s third largest manufacturer of milk products, to finance the company’s investment programme.
The Bulgarian dairy market remains highly fragmented. With the EBRD support, Fama will increase its competitiveness, boosting the development of the local dairy industry.
The project will enable Fama to expand its market share by building its own distribution network in Varna, Sofia and Plovdiv, the company’s largest regional markets. The company will also launch the production of added value products, such as long-life milk, while outsourcing low-margin products.
In addition, the EBRD funds will help Fama to refinance its short and medium-term loans, strengthening its balance sheet.
GED Eastern Fund II, the private equity fund that owns Fama, is co-financing the project with an additional €2.5m.
“This project will assist Fama in becoming a strong and efficient market player,” said Peter Bryde, EBRD deputy director for agribusiness. “It will boost the competition in the Bulgarian dairy sector and improve the company’s linkages with suppliers and distributors, while bringing higher quality products to consumers.”
“Fama will be able to optimise operations and increase its production, adapting to new market conditions,” said Robert Luke, president of board of directors of Fama. “The dynamics of the raw milk supply during the last two years created new challenges for farmers and dairy producers. The project will support the whole value chain of the business and further development of the quality dairy market in Bulgaria.”
Source: The EBRD
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