– 30.6 million lei to pay debts and invest in modernization
– Triple processing capacity in 2022
– Revenues of 21.7 million in 2022
– Target: increasing revenues by almost 40% between 2022 and 2024
Lactag S.A (stock symbol LACT), one of the largest dairy producers on the local market – in insolvency since 2016 – aims to increase its share capital by about 30.6 million lei to exit the judicial reorganization stage and subsequently for investments in the modernization of the company.
The share capital increase is part of the strategy developed together with the insolvency administrator CITR and aims to immediately capitalize the company, exit the reorganization and strengthen its market position. As a first step, the majority shareholders will put 300.000 shares up for sale on the stock exchange – representing approximately 30% of the total number of shares, with the proceeds being used in full to capitalize the company.
“In its mission to support and promote the value of Romanian companies, CITR stands by Lactag’s side in the share capital increase to accelerate the company’s exit from reorganization.
The dairy market has been on an upward trend in recent years and continues to grow at an estimated 2% annually. Therefore, the dairy sector can be an attractive one for investors, especially those eager to develop the local economy by investing in traditional Romanian brands.” – says Ionuț-Daniel Coleașă, CITR Partner.
The majority shareholders of Lactag are Robert Iriza and Adriean Asan-Mic, who hold 98.04% of the company’s shares (each with 49.02% of the company). The two shareholders took over Lactag in 2012.
“This capital increase is essential for Lactag’s future – we are very keen to get out of the judicial reorganization stage as soon as possible and focus on the development of the company.
We currently have a processing capacity of 1.5 million L/month, contracts and firm orders from major retailers leading to a tripling of processing capacity, which will allow us to reach a turnover of up to €31 million with an EBITDA of €4 million in 2024. Any investor who acquires shares from existing shareholders and becomes a shareholder with a reference date of 20.01.2022, gets a subscription rate of 12 new shares for one share held, which can ensure a great return on any amount invested in Lactag at this time.” says Adriean Asan-Mic, Lactag shareholder.
“We are open to partner with any other dairy industry players or equity investors and together strengthen Lactag among the top players in the industry.” says Robert Iriza, Lactag shareholder.
Lactag owns a milk factory in Costești – Argeș county and counts about 100 employees. The company went into receivership in 2016, following accelerated development in 2012-2015 with major investments in the dairy industry, meat processing and in the retail area by developing its network of 50 stores.
Of the amount targeted for the capital increase, about half – 15 million lei – will be used for partial payment of debts so that the company can emerge from insolvency.
The remainder will be used for investments in increasing production capacity and automating the packaging process.
The investments are needed to fulfill orders from existing contracts and the completion time is about 12 months if the necessary amount is available.
Tripling of processing capacity in 2022
Management wants Lactag to reach a processing capacity of 4.5 million liters per month during 2022, three times more than at present, thus being able to meet firm demands from large retailers. The company will invest in a new 15.000 liter per hour pasteurization line; dairy packaging machines, cheese, increased raw material storage capacity and finished product storage.
Lactag’s range of products includes milk, butter, cheese, sana, kefir, buttermilk, light yogurt, natural yogurt, cream, cow’s milk cheese.
The dairy market reached a value of €1.5 billion in 2020, an increase of 15% compared to 2019 mainly due to increased consumption and domestic production.
Target: Revenue growth of almost 40% between 2022 and 2024
For 2022, Lactag’s management estimates a turnover of €21.7 million and is counting on a net profit of €1.6 million.
For 2024, revenues of €31 million are estimated, up 42% from 2022. At the same time, the dairy producer’s management expects net profit to increase to €2.7 million in 2024.