24.5 million euro loan from the syndicate to strengthen leadership position of as Rigas Piena Kombinats in Latvia

Syndicate granted a 24.5 million euro loan to AS Rigas piena kombinats (Food Union Group), the leading dairy production company in Latvia, for the purpose of refinancing. SEB banka, Swedbank, and banka Citadele were involved in this deal.

“Upon reviewing corporate management of the company we decided to rearrange the loan portfolio and we began negotiations with syndicate banks on restructuring the loan portfolio and compliance with business needs,” Normuds Stanevics (Normunds Staņēvičs), AS Rigas piena kombinats (Food Union Group) Chairman of the Board, says. “A loan of this scale from the leading banks in Latvia confirms trust of the financial sector in the development of the company, its leadership position on the market and our product portfolio as well as it will facilitate the commenced development of the company on the local and foreign markets.”

Over the last years the annual turnover of AS Rigas piena kombinats has shown 30% growth year-on-year. Fast development goes hand in hand with reasonable funding not only from shareholders but also from banks. In such cases a solid partner in the banking area is critical.

Structure of the deal is very complex as debt obligations of several clients (Food Union Group) were combined in several banks. The total loan amount is 24.5 million euro: SEB banka’s financing for the company is 10.2 million euro, banka Citadele’s – 6.3 million euro and Swedbank’s – 8 million euro. “Reviewing of syndicate’s loan, preparation and issue of documentation as well as further management and monitoring of the loan required specific approach and professionalism from the banks highly appreciated by the management of AS Rigas piena kombinats,” Normunds Stanevics adds.

“We are happy to play the main part in implementing such a significant financial deal for our client Food Union. In the interests of the client we have organized constructive cooperation among Latvia’s biggest financial institutions to agree on the funding for one of the market leaders in the food processing industry. SEB banka has had a long and high quality cooperation with Food Union Group companies supporting their aims to develop, rearrange internal processes, improve their competitiveness and exportability to become a major players on the Baltic dairy producers market,” Viktors Bolbats, Head of Client Coverage, Corporate Banking Latvia at SEB banka, says.

“Swedbank is one of the long-term partners of AS Rigas piena kombinats and we are happy about the fact that a modern funding structure suitable to the needs of the group companies is used. It is important that the new cooperation model will facilitate Food Union’s future development strategy aimed at expanding its operation and significant increase in its export volumes. Thus solidifying the dairy production industry in Latvia as a whole and having a positive impact on the demand for milk produced in Latvia. This deal serves as proof of maturity of Latvia’s financial sector by building long-term cooperation with production and export companies significant to Latvia,” Ieva Vigante (Ieva Vīgante), Head of Corporate Banking Department at Swedbank, says.

“Financing production – both agricultural and industrial – is one of our priorities in the area of corporate crediting. The development of production in Latvia is the basis for future development of national economy. Therefore, it is very positive that the 3 biggest Latvian banks in terms of client base are able to cooperate and allocate large funding for the development of big production companies such as Rigas piena kombinats in our country. Citadele is willing to keep implementing such cooperation projects with other banks where businessmen require large financing,” Maris Macijevskis (Māris Macijevskis), Head of Large Corporate Banking Directorate at banka Citadele, approves of the deal.

Food Union Group was created in 2012 as a result of merger of two of the biggest dairy production companies in Latvia: AS Rigas piena kombinats and AS Valmieras piens. In the past 3 years over 30 million euro have been invested in the company to modernize its production technologies and increase its production capacities and volumes aimed at strengthening leadership position of the group in Latvia and capturing new export markets abroad. Food Union is becoming the most efficient and visible food production company in the Baltics.