AB Agrowill Group – one of the biggest companies that invest into agriculture has reached a strategic agreement with the banks DNB and Swedbank for the company long-term debt portfolio restructuring. Both banks will provide Agrowill Group with a syndicated loan of 39 million euros in equal parts which will be used for funding operating and development projects. The agreement will allow the company to decrease the sum of money necessary to repay the debt by even a third in the coming years.
“This is a very favourable agreement to us. Banks not only agreed to refinance the entire 33-million-euro debt portfolio but also will lend us additional 6 million euros. An additional long-term loan and attractive debt repayment schedules will allow us to invest nearly 16 million euros into the strategic Agrowill purpose – implementation of the organic farming model. The contract not only establishes a long-term partnership but it may also be considered as the mandate of confidence in our strategy. Upon a successful completion of the group restructuring and farm certification process for the organic production, debt portfolio restructuring enables completion of a solid base formation for the new Agrowill Group development”, said Kestutis Juščius, Chairman of the Board of Agrowill Group.
The company has calculated that more favourable loan repayment schedules and lower borrowing costs will enable the company to repay loans by nearly 10 million euros or 34 per cent less than it would be paid to the creditors during the coming 4 years if the conditions remained unchanged.
“We have been Agrowill partners for a lot of years and together we have experienced both successful moments and complicated company developmental stages. Current ongoing group transformation is an ambitious process that hardly fits the Lithuanian agricultural sector framework for its extent. However, we see that it is a thoroughly-thought process based on the recent global market trend analysis. Therefore, the decision was not very hard”, noted Dalius Darulis, Head of DNB Business Banking Department.
“I always admire businesses with sufficient will and determination to move beyond the comfort zone. In this case, we welcome both the courage of the company and a well-assessed business strategy based on forecasts and expertise. The decisions adopted in the recent Paris Climate Change Conference show that new perspectives are opening up to environmentally-friendly businesses. Therefore, we are glad to participate in Agrowill development process”, said Antanas Sagatauskas, Head of Swedbank Corporate Client Service.
K.Juščius added that the agreement with the banks will not affect Agrowill Group plans to issue additional shares in 2016. “We are interested in various forms of fundraising, thus, a new share issue remains in the shareholders’ agenda. Besides, I would consider the agreement with banks as a quality certificate of our business plans which could have a positive impact on the distribution of new shares to investors,” said K.Juščius.
The company has announced that the funds raised would be used for sustainable organic agriculture technology deployment and development, as well as agricultural production processing organization.
Agrowill Group is implementing an ambitious environmentally-friendly organic farming project which aims at applying the latest scientific knowledge for improvement of production processes and promotion of other agricultural market participants to actively sustain the Lithuanian land and water. Agrowill Group is also going to produce organic products to final consumers.
Last week Ekoagros, an organic agricultural and food certification body, completed the certification process of all AB Agrowill Group-owned and rented land (23.5 thousand ha), as well as group-owned livestock farms. All Agrowill Group farming activities will be implemented in accordance with the principles of organic production while, in accordance with the provisions in force, the production that will be grown in 2016 will still be referred to as the production of a transitional period. Accordingly labelled organic production will appear in the market in 2017.
In the recent five years, the EU organic food market has been increasing by an average of 8% per annum. In 2014, it had a turnover of about 25 billion euros. The consumption of such products is growing especially rapidly in Scandinavia – by about 10% per annum.
Linas Bulzgys, CEO of Agrowill Group, AB. Phone +370 685 16 267