SOFIA (Bulgaria), November 17 (SeeNews) – Bulgaria's Struma Wine Company, majority-owned by British-based investment fund Balkans Holdings Plc., is considering a bourse listing or acquisition by a venture capital fund in the medium term to raise fresh funds for its operations, Struma's CEO said on Tuesday.
Currently the company is entirely financed by its shareholders, Marin Dimitrov told SeeNews in an interview.
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“This will most probably continue next year as well. Until we start generating positive cash flow we cannot rely on financing from local lenders or from the bourse,” Dimitrov said.
“According to our business plan, at the end of 2010 or in early 2011 we will have a positive cash flow and nothing will impede us to list on the stock exchange."
Once it starts to post positive results and provided it decides to go public, the company will launch preparations for a bourse listing through an initial public offering in which it will seek to raise funds for financing its development plans. The other option that will be considered by the shareholders will be the sale of the company to a privately-held venture capital fund.
Struma Wine Company, which produces red and white wine under the Turtle Hill brand, plans to develop a wine tourism business at its vineyards located in the southern town of Sandanski, near the border with Greece. The company plans to build a hotel and a leisure area where wine can be tasted.
“If we carry out our wine tourism plan, investments can reach 5.0 million levs ($3.8 million/2.6 million euro),” Dimitrov said.
“We will try to attract the passenger traffic to and from Greece which passes through Sandanski, to attract tourists."
The company is currently focused on marketing its brand at home and in the UK which is its sole export market. It plans to produce around 100,000 bottles of wine this year, of which 90% will be shipped to the UK.
“In the next couple of years, we have to reach 200,000-250,000 bottles and at that time the company will have positive cash flow,” Dimitrov said and added that after that it will seek to raise funds through the bourse or seek a strategic investor.
“We are seeking an exit strategy. At some point we can sell our shares in the company to another strategic investor,” he said. The company will look for a foreign venture capital which could acquire a 51% stake.
Struma Wine Company (www.turtlehillwine.com), set up in 2007, is 54%-owned by Balkan Holdings Plc. (www.balkanholdings.com). It has a share capital of 900,000 levs, divided into 900 shares with a par value of 1,000 levs each. The company ended 2008 with a loss of 44,000 levs.
(1 euro = 1.95583 Bulgarian levs)