25 September 1997: Through a consortium of investors, Belgium“s Glaverbel has recently concluded an agreement with Russian investment company Alfa Capital, for a stake in Bor Glassworks, Russia“s l…
25 September 1997: Through a consortium of investors, Belgium“s Glaverbel has recently concluded an agreement with Russian investment company Alfa Capital, for a stake in Bor Glassworks, Russia“s leading flat glass producer. Alfa Capital, acting on behalf of Bor“s shareholders, came to an agreement with the consortium, headed by Glaverbel and including the EBRD (European Bank for Reconstruction and Development), International Finance Corp. (the private sector financing arm of the World Bank Group), Alfa Capital, and the management at Bor. Glaverbel will eventually hold a 75% stake in Bor. Bor Glassworks is Russia“s largest manufacturer of flat glass using the float process. The company has two float lines with a total capacity of 1,060 tonnes/day, able to produce glass for nearly 1 million cars annually, and a distribution network made up of 15 companies in Russia and 4 in former Soviet block countries. The glassworks has a workforce of some 6,000 people and recorded sales of US$100 million in 1996. Under the terms of the agreement, Glaverbel will obtain its shareholding in Bor through the acquisition of existing shares, and by a new share issue worth US$15 million. After the capital increase, Glaverbel is expected to have a 26% holding, in an investment worth US$20 million. The agreement calls for Glaverbel to be able to acquire at least 75% of Bor within the next 10 years. Although final approval is still subject to certain conditions, the agreement is expected to come into effect in October 1997. Glaverbel said that this investment forms part of its policy of geographical diversification, and represents a long-term investment opportunity. The company added that it will acquire a strategic position in one of the European markets with high growth potential in the regions in which Bor operates. The technology employed at Bor for the float process and automotive glass production is of western European origin, and the production facilities correspond to present market standards. Glaverbel added that the financial situation of Bor is healthy and profitable, which should enable it to carry out the planned programme of modernisation over the next few years, either through self-financing or through borrowing. Glaverbel pointed out that through this investment, the Group aims at maintaining its position as the leading flat glass producer in the emerging markets of central and eastern Europe. Given economic and political reforms in Russia, Glaverbel sees the country as having real growth potential, particularly in the automotive and building sectors, the largest consumers of flat glass.