Provision of a EUR 10 million senior secured loan to Umka d.o.o. ("Umka" or the "borrower"), a limited liability company incorporated in Serbia and the leading recycled cardboard manufacturer in the Western Balkans region.
The loan proceeds will be used to finance a part of the company's EUR 44.5 million investment in the expansion of its manufacturing capacity through an upgrade of the existing cardboard machine.
The investment will result in:
- Higher energy/resource efficiency of Umka's operations resulting in lower energy intensity of its operations in terms of electricity and gas spent per unit of product.
- The increase in operating scale and removal of bottlenecks will result in lower input costs and operating cost per unit of product, making the company more cost efficient and more competitive.
- Environmental benefits since the company will invest in a new system for aerobic and anaerobic treatment of the plant's wastewater discharge.
- Increase in waste paper collection and recycling in Serbia and the Western Balkans region thanks to Umka's post-project substantial increase in waste paper recycling.
- Introduction of coated liners as a new product category with higher profit margin as well as improvement of existing products' quality is expected to result in increase of Umka's share of sales with existing customers as well as to acquire new customers that require higher quality of cardboard.
ETI score: 60
The project entails the replacement of some old equipment in the cardboard production line, which would result in improvement in specific energy and resource consumption as well as end-product quality improvement, and production capacity increase. Moreover, the project is expected to increase the collection and treatment of waste paper by 38% (around 50,000 tons per year). The GET Clearing House confirmed that the project is 100% GET.
Umka d.o.o., a limited liability company incorporated in Serbia, is the leading recycled cardboard manufacturer in the Western Balkans region with 2019 revenues of EUR 60 million, EBITDA of EUR 12 million and net profit of EUR 8 million. The company is 100%-owned by Kappa Star Limited, an investment company incorporated in Cyprus which is 100%-owned by Mr. Nebojsa Saranovic.
EBRD Finance Summary
EUR 10m senior secured loan to the borrower.
Total Project Cost
Total project costs amount to EUR 44.5 million and represent investment in expansion of manufacturing capacity through upgrade of the existing cardboard machine.
EBRD offers a tenor of 8 years including 2 years grace period, which is longer than average loan tenor available to the client from commercial banks in the local market on reasonable terms and conditions.
Environmental and Social Summary
Categorised B (2019 ESP). The environmental and social issues associated with the provision of capex to expand the manufacturing capacity of the cardboard producer Umka d.o.o. (the Company) from 130,000t/a to 180,000t/a can be readily identified and managed.
Due diligence, carried out by ESD, focused on Umka's existing E&S and OHS management systems, the current facilities and operations, and the planned expansion. The Company has adequate Covid-19 response plans and policies in place and is not planning retrenchment as a result of the pandemic. Environmental emissions are in line with those prescribed in the plant's IPPC permit. Identified issues that need to be addressed, include: a lack of comprehensive E&S and OHS management systems; a lack of HR policies including supply chain management; inadequate storage of hazardous substances; legacy use of ODS in cooling systems; no stakeholder engagement programme in place; and outstanding environmental and water permits for the new WWTP.
To address the issues, an ESAP has been developed, and will be agreed with the Company prior to project signing. The ESAP measures include: revision and update of appropriate E&S and OHS management systems and relevant policies to cover issues described above, including a phase out of ODS; obtaining the required permits for the on-site WWTP; and the development of a grievance mechanism for the public. The EBRD will monitor the implementation of the ESAP through annual reports from the client and site visits as required.
Technical Cooperation and Grant Financing
TC funds to support this operation have been provided by the Shareholder Special Fund under the GET Project Preparation Programme. The TC funds were used to cover part of the costs associated with external legal due diligence. The cost-sharing principle was observed with the Borrower participating with 20% in the total legal due diligence costs.
Company Contact Information
381 11 3602 600
Fabrika kartona Umka d.o.o., 13. oktobra 1, 11260 Umka, Serbia
PSD last updated
02 Dec 2020
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