VILNIUS - In an apparent snub to local banks, the VP Market retail giant announced on Jan. 8 that it had signed a 35 million euro credit facility with the European Bank for Reconstruction and Development.
The EBRD, which was lending to the retail group for the first time, said that the loan would help VP Market to improve corporate governance and reporting standards, as well as providing more transparency to the VP Group structure and financial reporting of the group as a whole.
VP Market said it would use part the funds to complete the development of its logistical and food retail network in the Baltics.
VP Market is the largest retailer in the Baltics with a chain of 266 stores in the three countries, of which 185 are in Lithuania. Last week it announced that 2003 sales passed the 1 billion euro threshold and were up 18 percent from 2002.
In 2004 the retail operator wants to boost sales by 10 percent to some 4 billion litas (1.16 billion euros).
Such growth levels make VP Market one of the most attractive clients in the financial services market, but in this case the retail giant, which normally borrows from local banks, looked elsewhere for finance.
"We are observing irritation among banks in Lithuania over the fact that VP Market has borrowed from the European Bank for Reconstruction and Development," said VP Market CEO Ignas Staskevicius.
Staskevicius said the loan from the EBRD offered lower borrowing costs as compared with Lithuanian financial institutions but that VP Market had not used up its credit limit on the local market.
"We have a lot of assets are not used as security, such as several Maxima stores," Staskevicius said.
The retailer aims to pursue fast track expansion in all three Baltic countries this year. Investments in Lithuania, which encompass opening of new trade outlets in Alytus, Anyksciai, Utena, Vilnius and other towns, should exceed 100 million litas.
In December it was reported that Vilniaus Bankas and other local banks would provide financing for VP Market's acquisition of Vakaru Skirstomieji Tinklai, the western half of the national power grid.
VP Market also said recently that its market share in the Baltics is 22 percent and that it planned to increase the share to 30 percent this year. (BNS)