Author: ecobalt

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The largest environmental resource management group in the Baltic States, Eco Baltia AS, has successfully completed its second three-year EUR 10 million bond issue. The issue, which was conducted as a private placement, once again attracted strong investor interest, with total demand exceeding the issue size by amounting to 1.7 times. Orders were received from more than 100 institutional and retail investors in Latvia, Estonia and Lithuania.

“After the second Eco Baltia bond issue, we also see that investor activity is high. This confirms the investors’ long-term vision for the development of the company and the entire environmental resource management segment, in which we are expanding our international presence. The investments made will help us to take the next steps in the further growth of the group and contribute to the promotion of the circular economy, which is becoming increasingly important worldwide, in line with the European Union environmental policy cornerstones,”says Māris Simanovičs, Chairman of the Board of Eco Baltia.

The proceeds of the issue will be used to further the company’s development strategies through the acquisition of new companies. The acquisition of Metal-Plast, Poland’s largest PVC window recycler, is currently under consideration and will further expand Eco Baltia’s presence on the international market.

“Our goal is to rapidly accelerate Eco Baltia’s growth and further strengthen its position in the international market.  Experience in the capital market has shown us that attracting investment is one of the tools to achieve this. And this second bond issue shows us that we are on the right track in Eco Baltia’s development,”  says Santa Spūle, Eco Baltia Board Member and CFO.

The minimum subscription amount per investor was EUR 100 thousand. The total demand for bonds at the end of the placement period was almost EUR 17 million, 1.7 times the maximum planned issue size. Investors subscribing to the minimum investment amount of EUR 100,000  received full allocation, while the larger orders were partially satisfied given the high level of investor interest.

The highest interest in Eco Baltia’s bond issue came from retail investors, who were allocated 90% of the issued  bonds, while institutional investors received 10% allocation.

The coupon rate of Eco Baltia’s second bond issue was set at 9% per annum. The bonds have a maturity of three years (2 November 2026), but the issuer has the right to redeem the bonds prematurely after two years.

“Eco Baltia’s strategic development, financial performance and business model are in line with capital market guidelines, as demonstrated by yet another successful bond issue. As a long-standing client, Eco Baltia has proven to be a stable and growth-oriented company. This has also been recognised by investors. We are grateful to have been involved in this transaction for the second time and to have contributed to the development of Latvia’s leading environmental resource management company,” said Gints Belēvičs, Head of Markets in Luminor Bank.

The bonds are expected to be listed on Nasdaq Riga’s First North alternative market within six months of the issuance. The arranger of Eco Baltia bond issue is Luminor Bank, one of the leading financial service providers in the Baltic States, and the distributor is Šiaulių bankas. COBALT is the certified advisor, while Eversheds Sutherland Bitāns is the bondholders’ trustee.

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Eco Baltia, the largest environmental resource management group in the Baltic States, will launch its second unsecured bond issue of up to EUR 10 million with a fixed annual interest rate of  9% via a private placement. The subscription period starts on 23 October and will last until 27 October 2023. The bonds will have a maturity of three years and the issuer has the right to redeem the bonds after two years.

The bonds may be subscribed by qualified investors and retail investors, who will be able to purchase up to 10,000 bonds in total with a 1,000 EUR nominal value of one bond. Minimum subscription amount for one investor is set at 100 bonds, or 100,000 EUR.

In order to subscribe to the bonds, a retail investor in Latvia, Lithuania or Estonia must have a securities account with a financial institution that is a member of Nasdaq Riga or has relevant arrangements with a member of Nasdaq Riga. Qualified investors may subscribe the bonds through the arranger – Luminor Bank – or through any other financial institution which is a member of Nasdaq Riga.

The financing raised in the bond issue is intended to be used for general corporate purposes, including financing upcoming investment projects and/or acquisitions.

“Over the past few years, we have made great strides in the growth of Eco Baltia, which has helped the company to improve its financial performance and further develop on the international market. We now have subsidiaries in Latvia, Lithuania and, since last year, the Czech Republic, strengthening our position and role as a full-cycle waste management group in the circular economy. Capital raising via issuance of unsecured bonds is another big step for the further growth of the company,” says Māris Simanovičs, Chairman of the Board of Eco Baltia AS.

“In February this year, when Eco Baltia issued its first bonds, investor interest was very high, with total demand more than 3.5 times the maximum offer size. This is one of the factors that demonstrates the stability and growth of Eco Baltia. The new bond issue will allow the company to pursue even more ambitious goals and development on the international market,” says Vytautas Plunksnis, Partner at INVL Baltic Sea Growth Fund and Chairman of Eco Baltia’s Supervisory Board.

On October 25 at 10am Eco Baltia will hold a webinar on the bond offering. Webinar will be hosted by the Chairman of the Management Board Māris Simanovičs and Member of the Management Board and CFO Santa Spūle. Additional information about the bond offering will be provided by Gints Belēvičs, the Head of Markets in Luminor Bank, the Sole Lead Manager of the transaction. During the webinar attendees will be introduced with Eco Baltia’s business segments, growth story, its development plans, as well as the details of the public bond offering.

To sign up for the webinar, please use the following link: https://ej.uz/webinar_EcoBaltia_bonds . After filling in the application, attendees will receive a link to the webinar and instructions to their e-mail.

Webinar will be held in English. After the presentation, a question and answer session will take place. Attendees are welcome to send their questions about the company until October 24 close of business to the e-mail DCM@luminorgroup.com.

The bonds are expected to be listed on Nasdaq Riga’s First North alternative market within six months of issuance. The arranger of the Eco Baltia bond issue is Luminor Bank, one of the leading financial service providers in the Baltic States, and the distributor is Šiaulių bankas. COBALT is the certified advisor, while Eversheds Sutherland Bitāns is the bondholders’ representative.

The Offering Document and further information on Eco Baltia are available on www.ecobaltia.lv in the Investors section.

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The largest environmental resource management group in the Baltics, Eco Baltia JSC (AS), closed the first half of 2023 with a consolidated turnover of EUR 112 million, an increase of 13% compared to the first six months of last year (EUR 98.7 million in the first half of 2022). The Group’s consolidated EBITDA before goodwill impairment recognition amounted to EUR 16.7 million, compared to EUR 14.6 million in the same period last year, while the profit was EUR 2.9 million.  The increase was mainly due to the acquisition of new businesses, the solid performance of the environmental management sector and the targeted work on process rationalisation and automation.

Māris Simanovičs, Chairman of the Board of Eco Baltia: “By increasing the company’s indicators, we have managed to prove that even a volatile economic situation in the country and international markets can be fairly good period for business development. In recent years we have expanded in Latvia, Lithuania and the Czech Republic, and this year we will continue to increase Eco Baltia’s overall portfolio of companies and services. At the same time, the strategic development of the Group has benefited greatly from the contribution and professional vision of our largest shareholder, INVL Baltic Sea Growth Fund, which has helped to strengthen Eco Baltia’s position both in the Baltics and in international markets.”

Earlier this year, Eco Baltia’s existing portfolio of companies was expanded to include the newly acquired Latvian road maintenance company Pilsētas Eko Serviss, strengthening the environmental management sector within the group. As a result of the acquisition, a reorganisation was initiated in early 2023, during which Pilsētas Eko Serviss will be integrated into Eco Baltia’s subsidiary Eco Baltia vide in several stages.

The Group’s largest environmental companies, Eco Baltia vide and Ecoservice, continued to develop several projects in the first half of the year, including the development of a construction waste sorting yard and the sorting of household waste, textiles and other materials. At the same time, the companies submitted bids for several public tenders, some of which were successful, including the organization of waste management for the next five years in Klaipeda and Vilnius in Lithuania and for three years in Salaspils in Latvia. The companies also submitted the lowest bids in other tenders in different regions of Lithuania and Latvia.

“While Eco Baltia’s environmental sector is growing steadily, the recycling sector is affected by the current situation on the international market, where it is difficult for European recycled materials to compete with cheap virgin materials from Asia. On the positive side, the recycling sector is expected to grow strongly in the coming years. Nevertheless, we are already continuing the investment projects in our Group’s recycling companies PET Baltija and Nordic Plast to increase capacity and automate production, which will contribute greatly to long-term development and allow us to work more efficiently today,” explains Mr Simanovičs.

Nordic Plast, the polymer recycling company of the Eco Baltia Group, completed testing of its new plastics sorting and recycling line in the first half of this year. More than EUR 2.8 million was invested in its development last year, with the aim of increasing production capacity by up to 30% over time.  Eco Baltia’s PET bottle recycler, PET Baltija, continues to work on the development of its new production plant in Olaine, where PET Baltija’s investment currently stands at more than EUR 10 million. The new plant is scheduled to start production gradually this year, but will be fully operational next year, tripling PET production capacity.

This year, the Group plans to promote collaboration between its businesses by introducing new services and improving processes throughout the full waste management cycle. Further investments in recycling, waste and environmental management are planned to support the growth, efficiency and competitiveness of the Group’s businesses. At the same time, work will continue to improve working conditions, safety, social responsibility, governance and sustainability. Work is also underway on the valuation of new business acquisitions.