Landor is launching a capex plan of ca. TND 67.2 million (ca. EUR 21.2 million) which consists of (i) ca. MAD 165.5 million (eq. EUR 15.7million) investment in a new plant in Morocco and (ii) ca. TND 17.0 million (eq. EUR 5.5 million) in Tunisia for capacity expansion and process optimisation of its plant.
This project was approved in the context of the Bank's response to the COVID-19 pandemic. To avoid delays to the delivery of this project, the Bank's President granted a deviation from the ordinary timelines for PSD disclosure, as contemplated by Section V of the Directive on Access to Information. Details of the Bank's response to COVID-19, and this deviation, can be found on our website.
Project in Morocco: This investment in Morocco is driven by i) a dynamic local market, ii) a validated export potential to sub-Saharan countries out of Morocco. Landor decided to acquire 1.3 ha of land near Kenitra (in western Morocco) and to build a 6.1k sqm plant.
Project in Tunisia: This investment focus on capacity expansion and process optimisation of the plant in Khelidia (suburbs of Tunis). Landor is also planning investments in productivity, quality and safety in order to optimise the processes in its Tunisian plant and improve its industrial standards.
ETI score: 60
The DFF SME framework primarily targets the Competitive quality by helping SMEs restructure and become more efficient or professional. Sub-projects can target any of the other transition qualities as secondary objective.
This Project is supporting framework objectives by supporting an SME in the following areas: Competitive and Integrated.
Borrower 1: Landor SA is a Tunisian joint-stock company, and one of the leading local processed cheese producers. Landor was created in 1994 by Dr Hatem Denguezli and has been listed on the Tunis Stock Exchange ("TSE") since 2013. The Company has ca. 460 employees.
Borrower 2: Landor Maroc Industries ("LMI" or "Moroccan Borrower") is the Company's recently established subsidiary in Morocco that will own and operate a new cheese processing plant in Morocco.
EBRD Finance Summary
The financing plan of EUR 29.3 million is as following: (i) EBRD Senior Secured Loan, EUR 10.9 million (37%) (EUR 3.1 million to Landor SA and EUR 7.8 million to LMI, (ii) Africinvest equity injection for EUR 16.4 million (56%), (iii) VCCP Grant for EUR 0.5 million (2%) financed by the European Union and provided through the EBRD, and (iv) a Morocco Government Grant for EUR 1.4 million (5%).
Total Project Cost
The project costs are estimated at EUR 29.3 million.
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: The Bank can provide a regional Project with a multicurrency loan, which is not available in the market.
Standard-setting - helping projects and clients achieve higher standards: (i) an Accounting Improvement Programme which will improve the financial management and reporting, (ii) an ESAP which will improve environmental and social standards in Tunisia, and ensure the respect of high level ESD standards in the new plant in Morocco.
Environmental and Social Summary
Categorised B (2014 ESP). In-house due diligence was carried out by means of interviews with Landor management and workers, a visit to the cheese production site in Tunisia, and a review of an information package supplied by the Client. The environmental and social impacts associated with the extension of the cheese production plant in Tunisia and the construction and operation of a new plant in Morocco have been identified and will be managed by the implementation of an Environmental and Social Action Plan (ESAP). The results of the environmental and social due diligence (ESDD) indicated that the Company is well managed, and has the internal capacity to operate in line with the Performance Requirements, although certain operational and organisational issues require improvements and have been included in the ESAP. The main gaps with the Bank's PRs identified during the visit are related to occupational health and safety practices. The ESAP has been agreed with the Client.
The Tunisian site is FSSC22000 and ISO9001 certified. Landor aims to develop an integrated environmental and social management system (ESMS) with ISO14001 and ISO45001 certifications for both the Tunisian and Moroccan plants by end 2021. The ESMS to be developed in Morocco will be duplicated from the ESMS currently in place in Tunisia. For the site in Morocco, located in an industrial area, a draft ESIA has been prepared in compliance with the national regulation, and the permit is yet to be obtained. For the site in Tunisia, surrounded by agricultural land and a few houses, the Ministry of Industry has requested an update of the initial ESIA, and the process to obtain the licence to operate a Category 2 facility is ongoing. A Code of Conduct for Suppliers is in place and covers human rights, integrity, child and forced labour, non-discrimination, working hours and wages, H&S and environment.
Landor follows the Tunisian Labour Code; a recruitment procedure is in place, covering the employment of young persons, non-discrimination, written employment contracts, and a commitment to target gender equality. The Project will generate more than 150 jobs in Morocco, whereas in Tunisia the Project involves automation of some activities (to increase production and improve ergonomic conditions), meaning some positions will not be needed anymore; the management is committed to minimising the number of job cuts and does not expect a redundancy plan. 80% of the staff are members of the Union and a collective agreement is in place. Wages were increased in 2019 after completion of a benchmark study and the workers interviewed on site were satisfied with the working conditions and the company culture.
Wastewaters are pre-treated on site (decantation/flocculation) and then transported by trucks (120m3/day) to a licenced site for treatment. Two gas-fired boilers are present and the ESAP requires the Company to check their compliance with the EU Medium Combustion Plants Directive. A Waste Management Plan is in place and includes recycling of some non-hazardous waste (cardboard, aluminium, plastic), treatment by licensed contractors for oily waste and batteries, and destruction of microbiological waste and old cheese. The ESAP requires conducting a benchmark study against the EU BREF on Food Drink and Milk Industries for both plants.
A full medical check-up is requested for every new employee and then is required once a year henceforth. A Company Health and Safety Committee is in place. Practices observed on site show that the occupational health and safety culture needs to be reinforced; consequently, the ESAP requires finalisation of job risk assessments, reporting and analyses of near-misses incidents, and an OHS external audit. Landor owns 70 trucks to distribute final products in Tunisia; the ESAP requires developing and implementing a Road Traffic Safety Management System.
For the plant in Morocco, the land has been purchased in an industrial area from the State. According to Landor, there was no previous site user. A procedure on internal and external communication is in place; it includes stakeholder identification and engagement, employee grievances and community grievance mechanism, and customer satisfaction.
The Bank will monitor the implementation of the ESAP through review of annual Environmental and Social Reports (AESR) and communications with the Company as necessary.
Technical Cooperation and Grant Financing
Technical Cooperation (TC): The transaction's preparation will be supported with SBI TC funds, which will cover up to 50% of the due diligence costs (capped at EUR 50,000). SBI TC funds come from EBRD SSF. The Company will also benefit from an Account Improvement Program, in order to improve its financial management and information system. AIP funding comes from the EBRD SSF, for an estimated amount of EUR 20k.
Company Contact Information
Land'Or Bir Djedid Khelidia 2054 Ben Arous Tunisie
PSD last updated
28 Oct 2020
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Environmental and Social Policy (ESP)
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Independent Project Accountability Mechanism (IPAM)
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