Arla to issue bonds
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- 15 June 2011
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In order to create a broader platform for financing the Group’s growth strategy, Arla is giving professional investors the opportunity to invest in the company through a bond issue. The bonds will be issued in Swedish kroner and have a value of approximately SEK 1.5 billion.
Based on a strategy of increasing the Group’s turnover from the current DKK 49 billion to DKK 75 billion by 2015, Arla is aiming for significant growth in a number of markets. The growth will be financed through a combination of owner capital and borrowed funds.
The owner finance will be secured through the consolidation policy approved by co-operative members in the autumn of 2010 when they decided to double their investment (consolidation) in the company. The borrowed funds will come from the Group’s lenders, including banks and other financial institutions.
Arla wishes to establish the broadest possible financing platform without compromising on the company’s ownership structure. As a result, Arla Foods will now issue bonds to a value of SEK 1.5 billion to supplement other financing sources.
”Arla has solid backing from its co-operative owners. Nevertheless, we also have a duty to ensure that we, as a company, have the best and broadest borrowing and financing opportunities in our pursuit of acquisitions and investments in keeping with our growth strategy,” says Chief Financial Officer Frederik Lotz, Arla Foods. “This is why we have decided to issue bonds as an attractive investment for institutional investors.”
The bonds will be listed in Swedish kroner on the Luxembourg Stock Exchange, with a maturity of five years and with Danske Bank and Nordea as lead managers.
”We’ve chosen to issue the bonds in Swedish kroner because Sweden, one of our core markets, is a highly effective market for corporate bonds,” Frederik Lotz says. “The target group for the issue is primarily institutional investors in Sweden, but I won’t exclude approaching other target groups later”.
Arla’s owners have confirmed that the company will remain a co-operative and not a limited company, with external investors as co-owners. The bond issue will strengthen Arla’s strategy for growth without changing the company’s ownership structure.
Facts about Arla Foods
The co-operative and international dairy group, Arla Foods, is owned by approx. 7,800 Danish, Swedish and German milk producers. We have production in 13 countries, sales offices in a further 20 and employ more than 16,000 people. Our products are sold under three well-known brands - Arla®, Lurpak® and Castello® - in more than 100 countries around the world and our core markets are the UK, Denmark, Sweden, Finland, Germany and the Netherlands. Arla is also the world’s largest producer of organic dairy products. Net turnover for 2010 was DKK 49.0 billion.
Arla Foods is an international dairy company owned by 9,700 farmers from Denmark, Sweden, the UK, Germany, Belgium, Luxembourg and the Netherlands. Arla Foods is one of the leading players in the international dairy arena with well-known brands like Arla®, Lurpak®, Puck® and Castello®. Arla Foods is focused on providing good dairy nourishment from sustainable farming and operations and is also the world's largest manufacturer of organic dairy products.