DFF - Landor (Tunisia)

Location:

Tunisia

Project number:

51484

Business sector:

Agribusiness

Notice type:

Private

Environmental category:

B

Approval date:

07 Jul 2020

Status:

Signed

PSD disclosed:

22 Jul 2020

As permitted by paragraph 2.6 of Section III of the Access to Information Policy, disclosure of this PSD was deferred in accordance with paragraph 1.4.4 of the Directive on Access to Information.

Project Description

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 Objectives

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.

Transition Impact

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.

Client Information

LAND'OR SA

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

TND 10,000,000.00

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

TND 60,000,000.00

The project costs are estimated at EUR 29.3 million.

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: 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

Ridha Chouria
landor@gnet.tn
+21671366666
Land'Or Bir Djedid Khelidia 2054 Ben Arous Tunisie

PSD last updated

28 Oct 2020

Understanding Transition

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

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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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