Provision of a senior long-term loan of up to €86 million to Klaipedos Mediena AB, a public limited liability company domiciled in Lithuania, and Vakaru Medienos Grupe UAB, a private limited liability company domiciled in Lithuania (as joint co-borrowers), to finance the construction and putting into operation of a new greenfield particleboard plant in Akmene (North Lithuania), as well as to restructure the co-borrowers' balance sheets.
The proposed facility will support the investment programme carried out by VMG Group in Lithuania. The proceeds from the EBRD loan will be allocated towards capex to finance the construction of a new greenfield particleboard plant in Akmene with a production capacity of 600,000 m3 of particleboard per annum. The project will enable Vakaru Medienos Grupe to increase its production capacity of particleboards and furniture using modern efficient equipment.
The transition impact of the proposed project will be derived from the Green Economy Transition approach as the new greenfield plant will replace an existing 25-years old particleboard manufacturing facility in Klaipeda with older technology and less efficient equipment.
KLAIPEDOS MEDIENA AB
Klaipedos Mediena AB, a public limited liability company domiciled in Lithuania, active in the wood-processing sector (particleboard and furniture manufacturing).
Vakaru Medienos Grupe UAB, a private limited liability company domiciled in Lithuania, a holding company consolidating operating subsidiaries in Lithuania (including Klaipedos Mediena AB).
The co-borrowers are part of VMG Group of companies, one of the largest Lithuanian groups engaged in wood processing (particleboard and furniture production) and related activities, with operating companies in Lithuania and Belarus.
The EBRD is organising a financing package of €86 million out of which up to €46 million will be syndicated to commercial banks.
Total Project Cost
Environmental and Social Summary
Category B (2014 ESP). Due diligence has confirmed that the environmental and social risks associated with this transaction are site specific and can be mitigated using standard industry practices. Due diligence comprised a review of a detailed EHSS Questionnaire completed by the client; follow-up Q&A with management; and a site visit to both the existing manufacturing sites and the construction site for the new facility. The EHSS risk management policies and procedures at the existing manufacturing site in Klaipeda were found to be in line with the Banks Performance Requirements and to represent Best Practice in the sector. The positive results of frequent customer audits that are carried out provide further evidence of the standards that are applied at the operational level. Due diligence did identify that certain construction management OHS issues, such as restricting access and working at height procedures require upgrade to meet Best Practice. The planned operations at the new facility were reviewed and found to be compliant with Lithuanian and EU regulations, and the Banks Performance Requirements. It is planned that the policies and practices at the existing manufacturing plants will be applied at this new facility. An Environmental and Social Action Plan has been drafted and is being agreed with the client to confirm transposition of the risk management framework to the new facility; upgrade construction OHS practices; and confirm that the new production capacity at the new facility will, in part, replace older, less efficient capacity at the existing sites.
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