The Project consists of a senior secured loan up to EUR 25m with Tranche 1 (EUR 12.5m) to be committed for the investment in pasta production and an uncommitted Tranche 2 (EUR 12.5m) to finance biscuit, cake and feed business lines. The loan will be fully provided in Azerbaijani manats.
Azerbaijan economy has been hit by the twin shocks of the COVID-19 pandemic and a slump in oil prices in 2020 and GDP has contracted by 4.3%. However, with correction of oil prices the GDP is forecasted to increase by 2% in 2021. The client's both segments of business (distribution and production) were positively impacted and revenues have increased by 24% in 2020.
The Tranche 1 of EUR 12.5m will be used to finance the new pasta production through refinancing of the bridge short-term loans currently in place for the construction phase.
The use of proceeds of the Tranche 2 of EUR 12.5m will be used to finance the biscuit, cake and feed business lines, in particular the acquisition of new equipment.
The Project falls within the key strategic priorities of the Bank's Country Strategy for Azerbaijan (BDS/AZ/19-01(Final), which states that the Bank will support local companies in expansion through direct financing and targeted long-term advisory while promoting economic diversification.
ETI score: 65
(i) Inclusive (Primary): entailing the introduction of accredited trainings in partnership with external education providers for up to 120 young people in Azerbaijan; and
(ii) Green (Secondary): entailing to reflect the increase in pasta production and is related to the use of modern energy and water efficient process technologies. The GET share of the Project is estimated at 23%.
The Project is also additional and will be categorised as Gender SMART through the introduction of an equal opportunities action plan, consisting of a review of Avrora's current HR policies and practices to improve working conditions for women.
Avrora is one of the leading distributors of FMCG products and a manufacturer of food and beverages in Azerbaijan, fully owned by Mr. Jeyhun Abbasov.
EBRD Finance Summary
A senior secured long-term loan up to EUR 25m in manat, consisting from (i) committed Tranche 1 of EUR 12.5m ; and (ii) uncommitted Tranche 2 of EUR 12.5m.
Total Project Cost
Additionality of the Project stems from the Bank's ability to offer financing that is not available in the market from commercial sources on reasonable terms and conditions. The Project requires a long-term capital expenditure financing in local currency, which the local banks are reluctant to provide, whereas the Bank is being additional by providing a longer tenor that is rarely available in the market.
Environmental and Social Summary
Category B (2019 ESP). The EHSS risks associated with the installation and operation of plant associated with pasta and cake production are well known to the Bank and can be managed via the implementation of standard industry practices. Due diligence was carried out in line with the ESDD COVID-19 Approach and involved the completion of a questionnaire by the client and follow-up Q&A with the client management team to clarify aspects of the use of proceeds. The client has appropriate internal capabilities around risk management associated with the operation of the planned upgrades but requires to strengthen their contractor management procedures for construction and fitting out works. Additionally, the client needs to develop a stakeholder engagement procedure to attain compliance with PR10.
Technical Cooperation and Grant Financing
The Project is accompanied by Technical Cooperation (TC) to support the client both in the introduction of training and the development of the Equal Opportunity Action Plan and is funded by bilateral donor or Shareholder Special Fund under the Gender and Inclusion TC Framework TCRS 12804. The client will partially cover the TC cost (up to 20%).
Company Contact Information
994 12 310 22 59
Alasgar Qayibov street 10Q STN Business Centre AZ1108
PSD last updated
16 Mar 2021
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