Group Managing Director Jens Bigum and Deputy Group Managing Director Åke Modig, Arla Foods, signed the commercial paper programme in Stockholm on Monday 29 January.

Group Managing Director Jens Bigum and Deputy Group Managing Director Åke Modig of Arla Foods and representatives from Nordea (Unibank), Danske Bank and Föreningssparbanken signed a SEK 2.5 billion commercial paper programme for the company in Stockholm on Monday. The revenue will be part of Arla Foods’ normal financing procedures and will replace revolving credit arrangements and other forms of short-term debt.
"A commercial paper is one of the attractive options available to large, creditworthy companies in international capital markets," said Jens Bigum. "The merger between MD Foods and Arla last year, which created Europe's largest dairy company, provided us with a strength which, of course, we intend to use to our advantage."
Although for interest and foreign exchange reasons the transaction took place in Stockholm, the programme's revenue will be used for operative purposes across the whole Arla Foods group. Under the programme, securities totalling SEK 2.5 billion (nominal) will be issued. The securities are non-interest bearing but will be sold at a discount and redeemed at par no later than 12 months later. This means that Arla Foods obtains working capital at a somewhat lower interest than would be the case with revolving credit facilities. For buyers the attraction lies in the fact that commercial papers offer the same low risk as government bonds but offer better yields.