Montenegro gets first private corporate sector deal

By Mike McDonough

Montenegro gets first private corporate sector deal

A pioneering project has delivered benefits to Mesopromet, a meat producer in Montenegro. A €5 million EBRD loan has allowed the company to expand, improve production, and reduce environmental costs.

The rugged mountain scenery for which Montenegro is famous contains rich pasturelands ideal for supplying locals with their similarly rugged (and much loved) diet of steaks, sausages and cured meats. So it is not surprising that the EBRD’s first private corporate sector deal in the country should be with a meat production and processing company.

In December 2008, the EBRD lent Mesopromet €5 million to improve its production facilities, reduce their environmental impact and boost the company’s retail network. The deal will also lift health and safety standards and stimulate competition in Montenegro’s Agribusiness sector.

"The EBRD is very happy to support this project that will help raise the quality of produce in the meat sector in Montenegro and also increase competition at a time when food production remains an important issue," said Gilles Mettetal, Director of the Bank's agribusiness team.

International accolades

The investment, which will take the shape of senior secured long-term debt, will be used to help finish and equip a new canning facility at Mesopromet's production plant in Bijelo Polje, northern Montenegro. The new equipment will raise health and safety standards for Mespromet workers.

The company, which is owned by businessman Hilmija Franca and his family and has won numerous international accolades for its products, will also use the loan to install a new waste water treatment plant at the site, greatly reducing the facility’s environmental impact.

The second tranche of the EBRD loan will be used for setting up two new large retail centres. As well as producing meat and processing meat products, Mesopromet operates its own retail network in Montenegro. The openings of two new retail outlets in Bijelo Polje and Pljevlja will help respond to the lack of large retailers in northern Montenegro.

The loan is being arranged under the EBRD-Italy Western Balkans Local Enterprise Facility. This was established by the EBRD with financial contributions and support from Italy to help with the economic recovery of the Western Balkan region.

The TAM/BAS effect

The investment in Mesopromet follows a successful project by the EBRD's TurnAround Management (TAM) and Business Advisory Services (BAS) Programme, which draws on an extensive database of advisers with solid experience at senior management level.

The TAM team, which began its work with Mesopromet in 2005, helped the company to restructure its production facilities, improve output and develop a sales and marketing strategy. The programme also assisted Mesopromet in identifying new trade partners and arranged visits by managers to meat producers in Denmark and Sweden.
The BAS project involved local consultants who assisted in setting up Financial Accounts and Management Information Systems. TAM/BAS activities in Montenegro are largely funded by the European Union.

"At the completion of the TAM project in 2007, Mesopromet’s situation had improved dramatically", says TAM/BAS Director Charlotte Salford. "The company has new management procedures in place and is now implementing these skilfully and enthusiastically".