SBA’s furniture sector enters the bond market – 8 mln. EUR issue

One of the largest in the region, the SBA furniture manufacturing sector, has launched its first public bond issue. The company “SBA Furniture Group”, which owns 5 SBA furniture production companies and a logistics center in Lithuania, offers investors a 2-year duration 8 million issue of EUR bonds with a fixed 8 percent. annual interest rate. The raised funds will be used to pay back previously issued debts, as well as prepare for a new stage of production growth.

“Feeling the potential demand in the market, we aim to expand our financing arsenal. After the successful distribution of bonds to finance the SBA real estate projects “Urban HUB” in Kaunas and “Kopų slėnis” in Palanga, as promised, we are implementing advanced structural changes in the formation of the debt portfolio in the production sector as well. We plan to raise funding in two stages. The nominal value of one issued bond is EUR 1,000, and the minimum amount per investor is 20 bonds,” says Nerijus Aukščiūnas, Head of the Treasury of SBA Group.

According to him, the raised funds will soon be used to repay the loans used to finance the increase in the capacity of furniture manufacturing companies. Also, this decision will allow freeing the cash flows of the coming periods and preparing for the planned new phase of development in the future.

N. Aukščiūnas states that bonds of traditional industries are still a rare phenomenon in the Baltic countries, but this step was taken after gaining market interest. The head of the SBA Treasury says that the introduction of new financing methods in the manufacturing sector increases the competition for bank financing.

“Although traditional bank financing will remain the main structure of our debt portfolio, the alternatives created for it and the diversification of sources increase business flexibility and strengthen negotiating positions. We have no doubt that more and more manufacturing businesses will follow our lead. This is healthy for the entire financial market”, says N. Aukščiūnas.

The first stage of SBA Furniture Group borrowing with non-convertible and unsecured bonds will take place on March 18-25, during which it is planned to raise 5 million. euros. The rest, 3 million EUR bonds, planned to be issued at the end of June. It is possible to redeem the issue early. The company’s bond issue is distributed by the investment banking company “Redgate Capital” operating in the Baltic States.

The bond-issuing company SBA Furniture Group is one of the largest furniture exporters in the Baltic States. Its audited sales in 2022 amounted to 389 million euros.

Over the past few years, the company has restructured its business model, reorganized its management structure, and implemented large investment projects that strengthened competitiveness on a global scale. For example, a couple of years ago, the “Inno Line” factory was built near Klaipėda, and “Kauno baldai” was also located in a new building. Although demand has declined in recent years, SBA’s furniture manufacturing sector has focused on efficiency and achieved positive results. It is predicted that when the central banks start reducing the base interest rates in the second half of the year, both the real estate market and consumption will recover, so the demand for furniture is also expected to grow.

The SBA Group company SBA Furniture Group owns the management company SBA Home, the furniture manufacturing companies Inno Line, Klaipėdos baldai, Visagino linija, Kauno baldai, Šilutės baldai, as well as a logistics center. Innovo logistika and the company Robotex.

SBA Group operates in the furniture manufacturing, textile and real estate sectors. It exports its products to 50 countries around the world, and sales in 2022 amounted to 440 million Eur.