One of Latvia's leading timber processing companies, Stiga RM, and the development finance institution ALTUM have signed a loan agreement with a capital discount of 5.145 million euros for an ambitious investment project at their birch plywood mill in Kuldīga. In total, Stiga RM plans to invest 22.4 million euros in the modernisation of production processes and the purchase of new equipment, significantly increasing production efficiency and volume, while promoting product quality and the implementation of sustainability principles. The implementation of the project will create at least 38 new jobs for highly qualified engineering specialists.
The total planned cost of the modernisation project amounts to more than €22.4 million. Of this, nearly half, or almost 10.8 million euros, will be provided by Stiga RM from its own resources. A further €6.5 million will be provided by the OP Corporate Bank plc branch in Latvia in the form of a loan. Meanwhile, almost a quarter (€5.145 million) will be provided by ALTUM funding under the 'Large Investment Loan with Capital Discount' programme. This means that after the project is completed and the criteria specified in the agreement are met, the principal amount of the state loan will be fully or partially written off.
“Stiga RM’s operations are based on producing high-quality products and adding value to the wealth provided by Latvia’s forests; therefore, we are purposefully investing in the development and modernisation of our production, continuously improving and automating production processes and ensuring better working conditions for our employees. We are pleased to have had the opportunity to apply for and receive state support for the next stage of the company’s development – it is a significant mark of trust and motivation to continue manufacturing high value-added products, promoting the development of Latvia’s timber processing sector, increasing export volumes, and making an even greater contribution to our country’s economy,” emphasises Andris Ramoliņš, owner of Stiga RM.
The state loan programme is implemented by the Investment and Development Agency of Latvia (LIAA), which assesses the project's compliance with the criteria for receiving support, and ALTUM, which evaluates the project from a financial and viability perspective.
“The goal of the Large Investment Project Support Programme is to stimulate the implementation of projects that are significant to the Latvian economy; therefore, we are pleased to finance the next step in Stiga RM’s growth, which will allow the company to produce higher volumes of high value-added and high-quality products in a modern and sustainable facility. The evaluation of projects submitted under the programme and forwarded to us by LIAA for funding is currently in a very active phase – decisions have already been made or are close to being made for projects with a total loan volume of approximately €60 million. ALTUM also provides loans with capital discounts, which are an attractive financing solution for entrepreneurs, through four European Union Recovery Fund programmes aimed at energy efficiency, digitalisation, and the construction of affordable rental housing,” says Reinis Bērziņš, Chairman of the Board at ALTUM.
“The support programme provides opportunities for entrepreneurs to invest in strengthening their sectors and increasing the efficiency of their existing operations. It is expected that the programme will contribute to an increase in total goods exports, which reached 30% in 2022. It is an opportunity to modernise existing operations and promote projects that are important for the development of the Latvian economy. Support is provided to companies specialising in sectors such as bioeconomics, biomedicine, photonics, smart energy, and ICT, resulting in cooperation between companies and scientific institutions to create new and innovative solutions,” says Kaspars Rožkalns, Director of LIAA.
The Stiga RM development project began at the beginning of this year and will run until the end of 2024. Thanks to the introduction of new technological processes, the plan is to significantly increase the productivity of the birch plywood mill and improve product quality. By strengthening the company’s competitiveness and increasing production and export volumes, the company will also focus on implementing more energy-efficient and resource-saving production processes, investing in the promotion of sustainability principles.