Savola says EBRD to invest $100 mln in Egypt subsidiary

Savola Group (Savola) said on Tuesday the European Bank for Reconstruction and Development (EBRD) will invest $100 million in its Egypt-based indirect subsidiary United Sugar Company (USCE).

EBRD will invest $50 million, and convert existing debt of $50 million to equity, Savola said in a statement to the Saudi bourse, after signing a shareholders' agreement with EBRD and USCE shareholders. 

USCE’s share capital will then be increased and new shares will be issued to EBRD.

“The transaction will not only help the existing shareholders of USCE to strengthen the balance sheet but will also provide impetus to the un-branded commodity business of sugar under the current economic situation of Egypt, wherein foreign currency availability is the key business challenge,” the statement said.

After the deal is completed, and new shares in USCE are issued to EBRD, Savola Group and United Sugar Company’s ownerships will be reduced from 19.32 percent and 56.65 percent to 10.37 percent and 30.42 percent respectively, whereas EBRD will own 46.32 percent of USCE.

Savola and EBRD will have joint controlling rights in directing strategic, operational and financial decisions of USCE, the statement added.

Until shares are issued to EBRD, the assets and liabilities of USCE will be marked as held-for-sale, and net income of USCE will be disclosed as income from discontinued operations in Savola's interim consolidated financial statements.