by Ihor Eros, Kyiv Post Staff Writer
\nLeading Western banks have agreed to loan more than $121 million to two foreign-owned wood businesses in Ukraine.
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\nThe credit lines, both announced this month, mark two of the largest financing deals involving Ukraine\u00e2\u20ac\u2122s wood business and the continued flow of investment into Ukraine.<\/p>\n
Kronospan Ukraine, a particleboard producing subsidiary of Austria\u00e2\u20ac\u2122s Kronospan Group, inked a $72 million syndicated loan agreement with two banks: the European Bank for Reconstruction and Development and Austria\u00e2\u20ac\u2122s Erste Bank.<\/p>\n
Additionally, the EBRD granted a $49.2 million credit line towards the Ukrainian expansion plans of Barlinek, the largest Polish floor board manufacturer.<\/p>\n
The EBRD is the largest financial investor in Ukraine, having committed to date over 2.4 billion euros (more than $3 billion) across all sectors in the country.\u00c2\u00a0<\/p>\n
Kronospan\u00e2\u20ac\u2122s bold expansion<\/p>\n
Established in 1897, Kronospan claims to be the world\u00e2\u20ac\u2122s largest wood-based panel producer with a strong production presence in Europe. The syndicated loan will help Kronospan install a particleboard production plant in Ukraine\u00e2\u20ac\u2122s northwest Volyn Region.<\/p>\n
Kronospan is planning to refurbish an existing factory building and install two particleboard production lines, enabling the company\u00e2\u20ac\u2122s Ukraine arm to manufacture standard and melamine-faced particleboard, which are used in the production of household-office furniture and kitchen cabinets.<\/p>\n
Kronospan also plans to improve its handling of wood byproducts by installing a collection system for saw dust and chips.<\/p>\n
The upgrades and expansion plans will cost some $120 million.<\/p>\n
Erste Bank spokesperson Hana Cygonkova said her bank would provide $30 million of the $72 million loan. Cygonkova said Erste Bank has provided loans to Kronospan in the past for its operations in Bulgaria, the Czech Republic, Poland, Romania and Slovakia.<\/p>\n
Roman Plavitskiy, general director at Eurotrade Trade Company, a diversified production and trading company that uses Kronospan\u00e2\u20ac\u2122s wood to produce furniture, said the Austrian company is already a leader on the Ukrainian market. While exact market share figures are hard to come by, Plavitskiy said the Austrian wood company has a strong chance of gobbling up a large share of Ukraine\u00e2\u20ac\u2122s wood market by providing quality particleboard at competitive prices.<\/p>\n
\u00e2\u20ac\u0153The quality of particleboard produced by Ukrainian companies does not generally compare with that of Kronospan. More customers are ready to pay good prices for good quality. Kronospan may win a very good market position if they lower the prices on the market,\u00e2\u20ac\u009d Plavitskiy said.<\/p>\n
Eurotrade operates a furniture factory in Ukraine\u00e2\u20ac\u2122s capital and is currently building a new one in the Tarashchansky district of Kyiv Region.<\/p>\n
Barlinek\u00e2\u20ac\u2122s first steps<\/p>\n
Barlinek, a Warsaw Stock Exchange listed company, will use the loan to launch a Greenfield production facility with an annual capacity of 2 million square meters of floor board in Vinnytsya Region.<\/p>\n
Jerzy Kozubski, the company\u00e2\u20ac\u2122s investment director, said the factory construction project represents Barlinek\u00e2\u20ac\u2122s second phase of expansion into Ukraine.<\/p>\n
\u00e2\u20ac\u0153We started our activities in Ukraine by setting up a facility for making half-finished products to see how it would work out for us in Ukraine, considering the different legislative system and other factors,\u00e2\u20ac\u009d Kozubski said.<\/p>\n
\u00e2\u20ac\u0153Now we are ready to expand our operations to full scale production and have already started constructing a plant that is expected to be ready for production by May 2014,\u00e2\u20ac\u009d he added.<\/p>\n
In addition to selling floor board in Ukraine, the new facility will seek to export to other markets, including Russia, the United States and Western Europe, according to Kozubski.<\/p>\n
While a newcomer, Barlinek is not expecting tough competition in Ukraine.
\n\u00e2\u20ac\u0153According to the information we have, there\u00e2\u20ac\u2122s no single quality floor board manufacturer in Ukraine,\u00e2\u20ac\u009d Kozubski said.<\/p>\n","protected":false},"excerpt":{"rendered":"
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