OREANDA-NEWS. On July 02, 2008 The European Bank for Reconstruction and Development has agreed to make a long-term loan of 3,5 billion roubles (equivalent to ?95 million) to finance the expansion of Fazer Group?s bakery business in Russia. Fazer Russia operates under the brand Hlebny Dom and is the single largest bread and bakery operator in this highly fragmented market, reported the press-centre of EBRD.

The Bank will act as a lender of record for the full amount of the 3,5 billion rouble loan. EBRD will keep on its books 1,4 billion roubles (equivalent to ?38 million) and syndicate 2,1 billion roubles (equivalent to ?57 million) under an EBRD A/B loan structure. The maturity of the EBRD-funded portion of the loan (A loan) is 8 years.

The portion of the loan funded by commercial participating banks (B loan) includes both an eight-year maturity and a five-year one.

The EBRD loan will be used exclusively to fund capital expenditures of Fazer's Group companies in Russia. Part of the loan will finance the construction of a new bakery in Leningrad Oblast which will produce fresh and frozen bread. The total investment in the new bakery is estimated to exceed ?100 million.

Most of Fazer’s ingredients are purchased locally and by supporting this group the EBRD is encouraging the group’s local suppliers to make the investments needed to meet increasingly high standards of quality, hygiene and organisation which will ultimately benefit the whole industry in Russia, said Alain Pilloux, EBRD Business group Director for Russia.

Hlebny Dom is one of the leading players in the market in St Petersburg with an annual output of 130,000 tonnes of bread and other bakery products, while Fazer's Moscow-based Zvezdny bakery is one of the country’s largest manufacturers of pre-baked pizzas and frozen dough. Hlebny Dom employs approximately 3,700 people.

Fazer Group was founded as a family business in 1891. In addition to Russia, the Group operates in seven countries. Fazer Amica is a leading contract catering company in the Nordic and the Baltic countries while Fazer Bakeries offers fresh bakery products in Finland, Sweden, Estonia, Latvia and Lithuania. Fazer’s most important associated company is Cloetta Fazer AB, the leading confectionery company in the Nordic countries. The Fazer Group employs around 15,000 staff and its 2007 turnover was around ?1,2 billion.

To date the EBRD has committed over ?1,2 billion in more than 50 projects (with a total project value of over ?3 billion) to assist the agribusiness sector in Russia. Overall, the EBRD has to date committed more than ?4.3 billion in over 310 agribusiness projects in all the Bank’s countries of operation.