VILNIUS - The European Bank for Reconstruction and Development signed an agreement on June 3 to buy a 16.1 percent equity stake in Siauliu Bankas. The total value of the transaction is 20.4 million litas (5.9 million euros).
Along with the equity, Siauliu Bankas, one of the fastest-growing banks in the Baltics, is also planning to raise debt finance, with hopes to tap the bond market for another 20 million litas.
Donatas Savickas, Siauliu Bankas' deputy chairman, said that the bank's debut public bond issue would have a maturity of one year. "The size of the bond and its pricing will depend on demand, which is being surveyed now. I think that the bond is likely to pay 3.1 's 3.2 percent interest," he told a new conference June 3.
Savickas said that the bank expected to launch the bond issue in about a month's time and complete it within a brief period. "This is an alternative source for the bank to raise additional funds for development. And for investors, it is a good investment opportunity," he told the Baltic News Service.
The EBRD has said that its investment would provide capital and support for the bank's expansion, transforming it into a strong national bank focusing on small and medium-sized business finance.
The European bank is also expected to arrange a syndicated loan of 12 million euros for Siauliu Bankas. The board will make a decision on the project on June 28.
The EBRD is buying 12 million shares in Siauliu Bankas at a price of 1.7 litas per share (nominal value is 1 litas). Once the stock is paid for, Siauliu Bankas will distribute, free of charge, 6.27 million litas worth of shares to shareholders who held shares in the bank as of Mar. 30.
Currently, the EBRD holds stakes in Drobe, a manufacturer of pure wool and wool blend fabrics, the Sonex Group, and Litesko, a French-owned company that operates district-heating grids in some towns, among others. In total, it has provided some $484 million worth of loans to Lithuanian companies until 2004, including $176.6 million on behalf of the state and $307.4 million in loans to the private sector and municipalities.
Siauliu Bankas is targeting a 20 percent growth in net profits to around 7.8 million litas this year after posting a 56.8 percent rise in profits to 6.513 million litas in 2004.
