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  • Baltic pension funds have invested in guaranteed fixed-rate bonds issued by the Eika Group with the intention of strengthening the defence infrastructure in the region

    In April 2023, Partnerystės Projektai Keturi, part of Eika Group, issued guaranteed fixed-rate bonds to finance a defence infrastructure object in Šiauliai. The bonds, valued at 8 million euros, have a maturity of up to 3 years. The private placement was subscribed by the pension and investment funds managed by three Baltic fund management companies. The issuance was structured by the Lithuanian branch of the Luminor Bank AS.

    “This is a unique bonds issue, because for the first time Baltic pension funds have jointly invested in a development project aimed at strengthening the security infrastructure of the region. It is also the third time in a few years that capital market investors have entrusted our group. This time institutional investors have entrusted the EIKA Group, signalling that we have excellent opportunities that attract funds from a wider range of investors for the projects in progress,” the CEO of Eika, Domas Dargis, noted.

    The bonds were purchased by the Baltic pension and investment funds managed by three investment fund managers: SEB Investicijų Valdymas in Lithuania, CBL Asset Management IPAS in Latvia and a third unnamed pension fund in the Baltic countries. The issue will be listed on NASDAQ, the main regulated market bond list in the Baltics. This will provide additional liquidity to the issue, as pension funds will be able to trade these transferable securities on the open exchange if necessary. The listing is scheduled to take place spring 2024. Due to the confidentiality restrictions related to the project, the coupon rate has not been published, but will be, during the listing.

    “We are pleased that our experience and team expertise have helped us to develop a well-structured financial product tailored to pension funds. We take additional motivation from the purpose of this issue – everyone, albeit indirectly, is contributing to the development of the defence infrastructure vital for Lithuania and our NATO allies. Luminor and Eika have been cooperating for several years and this is one of the few companies in the sector whose team is fully aware of the alternative debt instrument market and its advantages. In addition, Eika has earned the trust of institutional investors, and this gives the company additional opportunities for implementing complex, large-scale projects,” explained Paulius Žurauskas, Head of Markets Department at Luminor Bank.

    Eika’s first bond issue took place in November 2020 and was successfully refinanced after a couple of years. In September 2022, the company made the second bond issue. Following the project level issue in April 2024, the Eika Group will have borrowed a total of 18 million euros on the capital markets.

    In January 2021, UAB Partnerystės Projektai Keturi signed a contract with the Ministry of National Defence of Lithuania regarding the development and administration of the defence unit infrastructure in Šiauliai. The duration of the contract is 15 years. In October 2022, the company obtained a building permit and began construction, which is ongoing, with completion scheduled for spring 2024.

    The planned site of the battalion-sized object in Šiauliai is 7.8 ha. Administrative and specialised buildings will be built in the settlement, including, barracks, a canteen, headquarter offices, a medical centre and sports facilities. It will also include technical buildings: warehouses, garages, a gas station, car wash, and an area with overhead protection for equipment. There will also be facilities for drills, parking areas for equipment and for cars, including some specially adapted for electric vehicles and people with disabilities.

    Legal consultants at Cobalt Legal and Glimstedt provided consultancy on the matter of issuing bonds, and the bond trustee is the Intertrust Group.