Translated version of this PSD: Ukrainian
The EBRD is considering providing a corporate loan package of up to USD 80 million to Galnaftogaz. It is expected to be matched by a similar size loan from the IFC.
The funds will be used for the following activities:
(i) Galnaftogaz Network expansion in the central and northern regions of Ukraine, the associated increase in working capital and investments in energy efficiency
(ii) The refinancing of mezzanine debt at the Company’s holding level.
The primary sources of transition impact of this transaction are expected to arise from:
1. the increased competition in a sector that remains fragmented and where the seven leading players control just under 50 per cent of the market (as measured by number of petrol stations).
This will be achieved by continuing to support the transformation of Galnaftogaz into a large private retailer which is able to compete at the national level (not only in Western Ukraine where business originated);
2. the mobilisation of commercial co-financing, which is not easily available to local mid-tier Ukraine corporates. This financing will also allow Galnaftogaz to finance its expansion plans and maintain its market share at a time when it is starting to repay the two existing debt facilities to EBRD; and
3. the demonstration effect of Galnaftogaz's successful restructuring of its debt profile, through the extension of the debt maturity and refinancing of some Mandatory Convertible Notes at the parent level.
4. the introduction of a number of energy efficiency technologies, which will increase their market penetration in Ukraine and have a demonstration effect on the industry.
The Project will also build on the transition impact achieved through the previous transactions.
PJSC GALNAFTOGAZ - an independent Ukrainian fuel distribution company operating a network of filling stations operating under the “OKKO” brand.
USD 15 million Senior “A” Loan
USD 45 million Senior Syndicated “B” Loan
USD 20 million Subordinated Mezzanine “C” Loan
IFC is considering matching EBRD’s investment in identical amounts.
USD 210 million.
Category B. Due diligence determined that the environmental and social impacts related to this Project are site specific and can be managed and/or mitigated through the implementation of the agreed Environmental and Social Action Plan (ESAP). Galnaftogaz is a long standing client of the Bank and previous projects have included requirements to strengthen environmental, health and safety, and social risk management; and to upgrade storage and distribution facilities to international standards. The Company has been responsive to the Bank’s requirements in the past and has co-operated in the provision of Annual Reports to the Bank on progress against the commitments made in Loan Agreements.
For the present Project, due diligence involved discussion with environmental and social specialists from the IFC who visited the Company to audit the Project; review of questionnaires provided to the Company to address the minor gaps between IFC and EBRD requirements; and detailed telecommunications with the Company management to draft the ESAP relevant to the current Project.
Previous projects were carried out under the Bank’s 2003 Policy and due diligence identified that actions were required in regard to the Stakeholder Engagement requirements of the 2008 Policy to bring the Company into compliance with the current Performance Requirement 10. Such actions have been included in an ESAP which has been agreed in principle with the Company. Due diligence also identified that certain upgrades were required in the containment features at bulk storage facilities and that the Company would benefit from providing training to the tanker driver employees. These issues have similarly been addressed in the ESAP.
Mane Akopyan, Manager
72 Turgenieva St.
Lviv, Ukraine 79015
Tel: + 38 032 298 88 89
For business opportunities or procurement, contact the client company.
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Tel: +44 20 7338 7168
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