RF - UACE - Working Capital

Location:

Romania

Project number:

52185

Business sector:

Manufacturing and Services

Notice type:

Private

Environmental category:

B

Approval date:

04 Aug 2020

Status:

Approved

PSD disclosed:

21 Aug 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

Senior secured EUR 20m (USD equiv.) working capital facility to support the Company's liquidity needs, which came under constrain mostly due to slower collection from its main customers and Covid-19 related expenditures. The 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.

Transition Impact

ETI score: 85

The aim of this project is to preserve the transition impact achieved under the existing operation with the client (Op ID: 43907). The previous operation's transition impact stemmed from: (1) Market expansion (strengthening the integration of local aerospace manufacturers in the global value chain); (2) Demonstration effect applicable to the production of higher value added aircraft machine parts; and (3) Skills transfer, through the Company's engagement in the education and training of its surrounding areas. PTI: 85

Client Information

UNIVERSAL ALLOY CORPORATION EUROPE SRL

Universal Alloy Corporation Europe ("UACE", the "Client") is a limited liability company incorporated in Romania and 100% ultimately owned by Montana Tech Components ("MTC", the "Sponsor"). UACE became EBRD's client in 2012, through the extension of a EUR 25m loan, OpID 43907.

EBRD Finance Summary

EUR 20,000,000.00

Total Project Cost

EUR 20,000,000.00

Additionality

EBRD financing is provided in the extraordinary circumstances of the COVID-19 crisis. Specific triggers for the Enhanced Additionality Approach will not apply.

Additionality sources: Covid-19 crisis response. The EBRD's financing alleviates liquidity pressure which arose as a result of the disruptions caused by the Covid-19 pandemic.

Additionality description: The aviation industry has been one of the most severely impacted and disrupted industries by the Covid-19 pandemic, with global travel restrictions impacting both personal and cargo air travel. This has generated significant pressure and disruptions on the supply chain, with Original Equipment Manufacturers (OEMs) postponing or cancelling orders, which has impacted UACE's liquidity position. For the foreseeable future, this will further impact UACE's solvability, as well as its ability to implement its growth plans. As the Borrower's unique provider of crisis-response financing, the Bank is undoubtedly additional by providing a cushion to limit both the short-term and long-term impact of the aforementioned issues.

Environmental and Social Summary

The project has been categorised B (ESP 2019), Low-Medium risk based on the sector and the Company's capacity to carry out its operations in line with the EBRD's Performance Requirements (PRs) demonstrated over a number of past projects. The Environmental and Social Due Diligence (ESDD) for this Resilience Framework project raising working capital was done in line with Covid-19 approach and was based on in-house ESDD carried out for previous transactions, review of comprehensive Annual Environmental and Social Report (AESR) for 2019 and additional Questionnaire for the Retrenchment. There is no Green Energy Transition component in this Project.

The Company has implemented a set of protective procedures and safety measures for their staff and the public based on Covid-19 procedure developed in line with advice of the World Heath Organisation and the Romanian Government. These are being regularly updated to address changing circumstances. The ESDD has confirmed that the Company has well established environmental and social (E&S) capacities and management systems. The monitoring Environmental and Social report provided for 2019 reflects satisfactory progress in the implementation of the Envrionmental and Social Action Plan (ESAP). However, due to aviation industry shutdown, the business suffered serious downturn, and a decision was made by the Board to lay off 15% of the staff in May 2020. Up to date 331 employees were made redundant based on prior process of consultation with trade unions and workers representatives, introduction of job retention measures, compensation payments and health insurance extension for 3 months as well as expected gradual return of the laid-off workers and reaching original headcount by early 2022. The retrenchment plan was implemented in line with national legal requirements, including pertaining to the Council Directive EU 98/59/EC norms relating to collective redundancies. The ESDD confirmed that the existing ESAP is adequate and robust and does not need to be updated. The Bank will monitor the Project and the ESAP implementation through review of Annual E&S Reports and when business returns to operational levels an audit with site visits can be performed to review ESAP and updated for the future expansion plans.

Technical Cooperation and Grant Financing

N/A

Company Contact Information

Daniel Varzaru
daniel.varzaru@universalalloy.com
+40 262 202 356
+40 362 418 911
daniel.varzaru@universalalloy.com
UAC Europe S.R.L., Dumbravita 244 A, RO- 0437145 Maramures

PSD last updated

21 Aug 2020

Understanding Transition

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

Business opportunities

For business opportunities or procurement, contact the client company.

For business opportunities with EBRD (not related to procurement) contact:

Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

For state-sector projects, visit EBRD Procurement:

Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

Specific enquiries can be made using the EBRD Enquiries form.

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 how to submit a Request for review through our confidential online form, by emailmail or telephone. IPAM is available to discuss your concerns and answer any questions you may have about the submission or handling of Requests, which follow the Project Accountability Policy and Guidance. Requesters’ identities may be kept confidential, upon request.

 

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