Cogeme is a global provider of high-precision solutions in the automotive industry, with plants in Italy, Romania, Brazil and India. The group has more than 50 years’ experience in high-precision mechanical solutions with several applications in the automotive industry.
When we started working with Cogeme in Romania, they had a state-of-the-art warehouse in Micesti, outside Pitesti, but limited production facilities. The aim of the project we became involved with was to expand as much as possible within the available resources. Together, we designed the investment project, given the opportunities and constraints at hand.
The project involved: increasing production facilities by 33 new pieces of equipment, employing 57 people, doubling turnover and exports, increasing labour productivity (turnover per employee) by 30% in the 5 years post-project completion.
We drafted the feasibility study. We designed the funding structure, maximising the contribution from non-reimbursable funds and, of course, minimising bank payments for the loan. Thus, we created the optimal funding structure as follows: 41.5% grant, 30.7% bank financing, 27.8% own funds. Total project cost: EUR 15 million.
We had prepared the funding application in order to obtain the grant through the Sectorial Operational Programme “Increase of Economic Competitiveness”. We got approval for the maximum possible grant of EUR 5 million. We matched the loan drawings to the investment schedule, to minimise the utilisation of a bridge loan. This results in keeping the lending costs to the minimum possible. Given the payment and delivery terms for the equipment, we determined that the grant reimbursement requests should be in 4 tranches.
Once the grant had been approved, we proceeded with fund raising from the banks. We held talks with a number of banks, both local and international, and obtained 3 financing offers within a timeframe of less than one month. We analysed the offers and we helped the client choose the right bank to finance this project. They opted for Raiffeisen Bank, due to their speed in reaction and financial offer. For each bank we had prepared a different set of projections, to accommodate the particularities of various financing types. Raiffeisen offered exactly the products we had envisaged and incorporated in the funding structure, namely: a long-term investment loan, a bridge loan, and a working capital facility. Total amount of the approved loan is EUR 11,185,000.
Since the grant application evaluation took over a year, the company slightly changed their investment needs. The project had to be implemented as written in the application, but the market needs were no longer exactly the same. Accordingly, Cogeme had to adjust their expansion plans. Thus, during the project implementation, we helped the company understand the constraints of EU funding and readjust their offering, in order to still fully implement the project and use the grant approved. We are now in the final phase of project implementation.
Cogeme had set up a Romanian company to take advantage mainly of the cost-effective Romanian labour. They contacted Bridge Europe Consulting to help with development plans. Our initial contact was in 2009, when they had a turnover of EUR 5.5 million. With the project in which we were involved, their turnover now reached EUR 26 million .