Nerijus Aukščiūnas, Head of Treasury at SBA Group: ‘Sensing the potential demand in the market, we are looking to expand our financing arsenal. Following the successful placement of bonds to finance SBA’s real estate projects – Urban HUB in Kaunas and Kopų Slėnis in Palanga – as promised, we are implementing advanced structural debt portfolio formation changes in the manufacturing sector. We plan to raise financing in two stages, offering Private and Institutional investors to acquire up to 8 thousand bond units, where the nominal value of each bond is EUR 1,000, and the minimum number of bonds per investor is 20.’
With this step Company implements structural debt portfolio formation changes, where raised funds will be used to prematurely repay part of previously taken loans It will also allow to free up cash flow for future periods and prepare for the planned new expansion phase.
Aukščiūnas says that traditional industry bonds are still a rare event in the Baltic states, but this step was taken after sensing market interest; introducing new financing methods in the manufacturing sector increases competition for bank financing:
‘While traditional bank financing will remain our main source while funding business activities, the alternative instruments and diversification of financing sources increase businesses’ flexibility, reduce risks and strengthen negotiation positions. We do not doubt that more manufacturing businesses will follow our example. This is healthy for the financial market as a whole.’
The first round of SBA Furniture Group’s non-convertible and unsecured bond offering will take place from 18 to 25 March where it is expected to raise EUR 5 million. The remaining tranche of EUR 3 million is planned for the end of June 2024. The company’s bond issue is underwritten by Redgate Capital, a Baltic investment banking firm.
Bond issuer, SBA Furniture Group, is one of the largest furniture exporters in the Baltic states with its audited revenue of EUR 389 million in 2022.
Over the last few years, the company has restructured its business model, reorganised its management structure and implemented significant investment projects that have strengthened its global competitiveness. For example, the Inno Line factory was built near Klaipėda a couple of years ago, and Kauno Baldai has also established itself in a new building. Although demand for furniture has fallen recently, SBA’s furniture manufacturing business lines have focused on increasing efficiency and delivered positive results. With central banks starting to cut base interest rates in the second half of the year, the property market and consumption are expected to recover, and demand for furniture is expected to grow.
SBA Furniture Group, an SBA Group company, owns the management company SBA Home, the furniture manufacturing companies Inno Line, Klaipėdos Baldai, Visagino Linija, Kauno Baldai, Šilutės Baldai, as well as the logistics centre Innovo Logistika, and Robotex.
SBA Group operates in the furniture manufacturing, textile and real estate sectors. It exports its products to 50 countries worldwide and has sales of EUR 440 million in 2022.
