Coca-Cola HBC Romania, the bottling company that last yearposted business worth 500 million euros, has increased its sharecapital by 26% by swapping a 65 million RON (16 million euros) debtto its parent company for equity, Official Gazette data reveal. Theintra-group loan taken out last November accounts for 16% of thetotal debt in the 2008 balance sheet of the company and the debtfor equity swap is the only capital increase performed by theproducer in the past year.
The interest rate for this loan can be put at approximately 11%per year, according to the data published by the Official Gazette,2 or 3% lower than the average interest on the market at this time.Coca-Cola officials have not provided additional information aboutthe loan.
Multinationals active on the market have relied quite heavily onintra-group loans to finance investments in Romania, andconsultants explain this is because of the low costs. "When acompany borrows money from outside, the cost of capital is higherthan when it takes out intra-group loans. Still, there is a foreigncurrency risk in this case, too," says Ionut Pascu, senior projectmanager of Roland Berger Strategy Consultants.
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