Kormotech

Location:

Lithuania

Project number:

51181

Business sector:

Agribusiness

Notice type:

Private

Environmental category:

B

Approval date:

26 Nov 2019

Status:

Repaying

PSD disclosed:

07 Nov 2019

As per section 1.4.2 (iii) of the Directive on Access to Information: "For Projects approved by Bank management where the Board of Directors has delegated the approval authority, the PSD shall be disclosed at the start of the relevant no-objection notification period to a member country of the Bank in accordance with Article 13 (iii) of the Agreement Establishing the EBRD."

Project Description

The Project comprises construction of a new pet food plant in Lithuania and its subsequent expansion in 2022-2023. 

Project Objectives

The Project will support Kormotech Group's strategy to expand its export operations and georgaphical diversification. 

Transition Impact

ETI score: 73

Transition impact of the Project stems from the following:

  • Integrated quality: The Bank will support the first cross-border investment of a Ukrainian company, consisting in the construction of a new production facility in Lithuania.
  • Inclusive quality: The Project will also facilitate the expansion of specialised veterinary education across Ukraine to improve employability of young professionals under the Inclusion quality.

Client Information

KORMOTECH UAB

Kormotech UAB (the Borrower) is a pet food producer established in Lithuania in 2018, which is a 100% subsidiary of Kormotech Group, one of the top three market players in the Ukrainian pet food market and #51 pet food producer globally.

EBRD Finance Summary

EUR 15,000,000.00

EUR 10 million senior secured long-term loan provided to the client in 2019. The loan amount to be increased by EUR 5 million in 2022. 

Total Project Cost

EUR 27,400,000.00

Additionality

Financing structure - EBRD offers financing that is not available in the market from commercial sources on reasonable terms and conditions. Such financing is necessary to structure the project.

Risk mitigation - EBRD provides comfort to clients and investors by mitigating non-financial risks, such as country, regulatory, project, economic cycle, or political risks.

Standard-setting - helping projects and clients achieve higher standards. Client seeks/makes use of EBRD expertise on higher inclusion and equal opportunities action plans.

Environmental and Social Summary

Categorised B (2014 ESP). Investments into expansion of the existing and construction of the new pet food production facilities are associated with site-specific environmental and social (E&S) impacts that were assessed via environmental and social due diligence (ESDD). The identified gaps will be mitigated through the implementation of an environmental and social action plan (ESAP).

ESDD was undertaken in-house and included a site visit and EHS audit of the current operational activities, assessment of the proposed Project and corporate EHS management system. Particular attention was paid to labour and safety aspects, resource sustainability, air emissions and consistent application of the Corporate EHS requirements and policies to all operations

It has been established that Kormotech's current operations and E&S management systems are compliant with the national legislation and it has robust EHS management system and the institutional capacity to deliver the Project in line with EBRD requirements. Kormotech is certified in FSSC 22000 and ISO 22000. It's existing E&S management systems ESAP requirements will be extended on the newly established overseas operations.

Some gaps against the EBRD PRs were identified and in order to close them a targeted ESAP has been developed and agreed, which includes, inter alia, improvement of the existing E&S management system at all sites, implementation of supply chain and enhanced contractor management, implementation of a grievance mechanism for internal and external stakeholders, and emergency response improvement and further implementation of air emission abatement measures to bring the operations in line with EU requirements.

2022 update. The Bank has been monitoring the Project through the review of the Annual Environmental and Social Reports (AESR), which have demonstrated the Client is generally in compliance with the local regulation, Bank PRs and has achieved good progress in the implementation of the agreed ESAP.

The approved increase in the loan amount by EUR 5 million will be used for purchase of the new production equipment to be installed in existing production facility in Lithuania. No new ESAP is required for the loan increase. The Client will be required to maintain compliance with current ESAP and Bank's PRs and will extend Environmental and Social Management systems to include the new components financed by the increased loan.

Technical Cooperation and Grant Financing

TC funds provided by the Japan-EBRD Technical Cooperation Fund to partially cover Project's external legal costs.

Company Contact Information

Kateryna Kovalyuk
kateryna.kovalyuk@kormotech.com.ua
+38 (050) 377 61 92
+38 (032) 298 98 39
http://kormotech.com
Kormotech LLC 79041, 73, Heroyiv UPA Str., Lviv, Ukraine

PSD last updated

22 Jul 2022

Understanding Transition

Further information regarding the EBRD’s approach to measuring transition impact is available here.

Business opportunities

For business opportunities or procurement, contact the client company.

For business opportunities with EBRD (not related to procurement) contact:

Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

For state-sector projects, visit EBRD Procurement:

Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

Specific enquiries can be made using the EBRD Enquiries form.

Environmental and Social Policy (ESP)

The ESP and the associated Performance Requirements (PRs) set out the ways in which the EBRD implements its commitment to promoting “environmentally sound and sustainable development”.  The ESP and the PRs include specific provisions for clients to comply with the applicable requirements of national laws on public information and consultation as well as to establish a grievance mechanism to receive and facilitate resolution of stakeholders’ concerns and grievances, in particular, about environmental and social performance of the client and the project. Proportionate to the nature and scale of a project’s environmental and social risks and impacts, the EBRD additionally requires its clients to disclose information, as appropriate, about the risks and impacts arising from projects or to undertake meaningful consultation with stakeholders and consider and respond to their feedback.

More information on the EBRD’s practices in this regard is set out in the ESP.

Integrity and Compliance

The EBRD's Office of the Chief Compliance Officer (OCCO) promotes good governance and ensures that the highest standards of integrity are applied to all activities of the Bank in accordance with international best practice. Integrity due diligence is conducted on all Bank clients to ensure that projects do not present unacceptable integrity or reputational risks to the Bank. The Bank believes that identifying and resolving issues at the project assessment approval stages is the most effective means of ensuring the integrity of Bank transactions. OCCO plays a key role in these protective efforts, and also helps to monitor integrity risks in projects post-investment.

OCCO is also responsible for investigating allegations of fraud, corruption and misconduct in EBRD-financed projects. Anyone, both within or outside the Bank, who suspects fraud or corruption should submit a written report to the Chief Compliance Officer by email to compliance@ebrd.com. All matters reported will be handled by OCCO for follow-up. All reports, including anonymous ones, will be reviewed. Reports can be made in any language of the Bank or of the Bank's countries of operation. The information provided must be made in good faith.

Access to Information Policy (AIP)

The AIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations following its entry into force on 1 January 2020. Please visit the Access to Information Policy page to find out what information is available from the EBRD website.

Specific requests for information can be made using the EBRD Enquiries form.

Independent Project Accountability Mechanism (IPAM)

If efforts to address environmental, social or public disclosure concerns with the Client or the Bank are unsuccessful (e.g. through the Client’s Project-level grievance mechanism or through direct engagement with Bank management), individuals and organisations may seek to address their concerns through the EBRD’s Independent Project Accountability Mechanism (IPAM).

IPAM independently reviews Project issues that are believed to have caused (or to be likely to cause) harm. The purpose of the Mechanism is: to support dialogue between Project stakeholders to resolve environmental, social and public disclosure issues; to determine whether the Bank has complied with its Environmental and Social Policy or Project-specific provisions of its Access to Information Policy; and where applicable, to address any existing non-compliance with these policies, while preventing future non-compliance by the Bank.

Please visit the Independent Project Accountability Mechanism webpage to find out more about IPAM and its mandate; how to submit a Request for review; or contact IPAM  via email ipam@ebrd.com to get guidance and more information on IPAM and how to submit a request.

 

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