Food processor takes bold loan

  • 2005-06-08
  • Baltic News Service
VILNIUS - Arvi ir Ko, a leading Lithuanian food processor, has taken a bold financial move and borrowed $1 million from a Russian bank in order to complete its fertilizer plant project in Chernyahovsk, in Russia's exclave of Kaliningrad.


"We have taken a short-term loan under annual interest of 9 's 10 percent. We hope to pay the money back in a year's time," said Vidmantas Kucinskas, Arvi ir Ko chairman.

"The interest rate is considerable; however, we have opted to take that minor loan as we will have to cooperate with that bank after the commencement of fertilizer production," he explained.

Lithuania's Hansabankas, which intends to set up a branch in the region of Kaliningrad this year, would also contribute to this project, he added.

The total value of Arvi ir Ko's greenfield investment in Kaliningrad will exceed 34.53 million litas (10 million euros), the Verslo Zinios business daily reported last week.

Banks active in the Kaliningrad region usually offer companies loans not exceeding 3 years and with an annual rate of 10 's 14 percent.

In Lithuania, the corresponding rate is 4 's 5 percent.

The list of major Lithuanian investors in Kaliningrad now includes Snaige, a refrigerator producer, Vilke, a meat processing company, Viciunai, a fish processor, Sota, a furniture plant, the Kretingos Grudai mill, and Naujoji Ruta, Lithuania's largest confectionery.