Coca-Cola swaps 16m-euro debt for equity

Coca-Cola HBC Romania, the bottling company that last year posted business worth 500 million euros, has increased its share capital by 26% by swapping a 65 million RON (16 million euros) debt to its parent company for equity, Official Gazette data reveal. The intra-group loan taken out last November accounts for 16% of the total debt in the 2008 balance sheet of the company and the debt for equity swap is the only capital increase performed by the producer 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 about the loan.

Multinationals active on the market have relied quite heavily on intra-group loans to finance investments in Romania, and consultants explain this is because of the low costs. “When a company borrows money from outside, the cost of capital is higher than when it takes out intra-group loans. Still, there is a foreign currency risk in this case, too,” says Ionut Pascu, senior project manager of Roland Berger Strategy Consultants.