July 26 (SeeNews) - Slovenian hygiene and tissue paper producer Paloma said on Tuesday it has signed an 18.2 million euro ($20 million) recapitalisation deal with Slovak private equity fund Eco-Invest.
The agreement, which is expected to be approved by Paloma's shareholders at a meeting on Friday, envisages a share capital increase based on a bid price of 4.01 euro per share by Eco-Invest, the Slovenian firm said in a statement published on its website.
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After the acquisition of shares in the recapitalisation process, Eco-Invest will be required to make a takeover bid for the remaining 3,395,834 shares it will not own in Paloma in accordance with Slovenia's Takeovers Act.
Eco-Invest will offer Paloma's 702 shareholders 13.6 million euro for the remaining share, Ljubljana-based media reported on Monday.
"Following the successful completion of the process, the financial and strategic support of Eco-Invest will allow us to finalize the restructuring of the company and to complete our strategic investment programme," Tadej Gosak, president of the management board of Paloma, said in the statement.
The recapitalisation process is expected to improve Paloma’s financial performance, which in turn will help ensure a stable future for the company.
In the first half of 2016, Paloma's sales increased 4% on the year to 44 million euro, it noted. The company has increased the market share of its own brand on strategic markets and is anticipating positive results for the full year 2016.
In January, Paloma's shareholders approved a proposal made by Poland-based private equity fund Abris Capital Partners to raise the Slovenian company's capital by 15 million euro, following the completion of a tender call for recapitalisation. However, in June, Abris withdrew from the agreement.
Eco-Invest is a Slovakia-based industrial and financial holding with long-term strategic investments in industrial and production companies, primarily in the pulp and paper, tissue paper, envelopes and packaging sectors.
($=0.9092 euro)