Provision of an up to €17.8m senior secured financing from the EBRD account (the "Loan") to Agrofusion Group (the "Group" or "Agrofusion"), Ukraine's leading tomato paste producer. The Loan proceeds will be used to finance the construction of the Group's fourth tomato processing plant and new greenhouses, as well as the purchase of equipment for tomato pomace processing, new agricultural equipment and eco-plastic containers for tomato paste (the "Project").
The Project is expected to enhance the Group's scale and competitiveness, with a 30% increase in total paste production capacity, improved production efficiency and environmental footprint. The Project is expected to result in a significant reduction in CO2 emissions from use of precision farming technologies, logistics and packaging optimisation, commissioning of energy efficiency equipment, and higher automation. In paralell, the Group is expected to benefit from an improved resilience given the larger amount of irrigated land bank.
ETI score: 65
Primary Transition Quality: GREEN.
The Project's use of proceeds includes the construction of a state-of-the-art tomato paste production facility and the construction of a tomato pomace processing unit compliant with BAT standards, as well the construction of new efficient greenhouses, the purchase of new farming machinery, the expansion of the drip irrigation systems and the replacement of metal drums with reusable eco-plastic containers for product delivery. These investments are expected to lead to efficiency improvements in terms of energy, fuel and water consumption.
Secondary Transition Quality: WELL-GOVERNED.
The Project will support the Group to implement improvements in its corporate climate governance practices and prepare and formally adopt a climate strategy and decarbonisation roadmap, with key features publicly disclosed.
INTEGRATED AGROSYSTEMS FE
The Borrower is Farm Enterprise "Integrated Agrosystems", a Group company incorporated in Ukraine, which operates one of the Group's three existing tomato paste production plants.
EBRD Finance Summary
Total Project Cost
Standard-setting: Client seeks/makes use of EBRD expertise on corporate governance improvements, including for climate risk management.
Financing structure: The EBRD offers a tenor, which is longer compared to the average tenor available to the client in the market on reasonable terms and conditions.
Gender SMART: the Project will lead to an increase in the share of female employees, as the client will introduce a certain target of women to be hired under the Group's expansion plans.
Environmental and Social Summary
Categorised B (ESP 2019). The Project involves the development of a new facility for the processing or tomatoes and production of tomato paste and the construction of greenhouses for growing of tomato seedlings. The facility will be located on the outskirts of the town of Chaplynka on land previously used for both industrial and agricultural purposes. The Group has conducted engineering studies to confirm the suitability of the site. The Competent Authorities have determined that the facility requires an Environmental Impact Assessment under national law and the Group have initiated the process to undertake the required studies. The Bank's due diligence for this Project was undertaken internally and included review of an Environmental and Social Due Diligence Questionnaire completed by the Group, review of the AESRs for the previous deals, and submission of additional information to supplement the questionnaire.
The Project is considered to be aligned with the climate change mitigation goals of the Paris Agreement as it features in the joint MDB "aligned list" (Low-GHG agriculture, climate smart agriculture). Climate risks identified at the screening stage have been subject to further assessment and adequate measures are in place to ensure that the Project is aligned with the adaptation goals of the Paris Agreement.
Agrofusion is an existing client of the Bank with a good track record on previous projects operating robust, certified, environmental and social management systems, and with the capacity to implement the Project in line with the PRs. Existing farming and production facilities are certified, as applicable, to food safety (ISO 22000), environmental (ISO 14001), health and safety (ISO 45001) and Global Gap standards. The Group has demonstrated a strong focus on resource efficiency by seeking to reduce water and energy use, minimise waste and limit impacts on the local environment and biodiversity. Existing facilities have been developed in accordance with EU BAT requirements.
The proposed Western Facility will be the fourth processing facility put into operation by the Group and, to date, no significant environmental or social risks have been identified. Key issues to consider include energy and water usage, air emissions, discharge of waste waters, disposal of wastes and use of hazardous materials for elements such as refrigeration. The facility will be the Group's most advanced in terms of resource usage going beyond BAT requirements for selected aspects notably water and energy consumption. Waste waters will be treated and selectively recycled back into the production process.
Previously approved human resource, and health & safety, management practices will be extended to the new facility. The Group operates in accordance with a Collective Agreement and has adequate policies in place to comply with the requirements of PR2 including an appropriate grievance mechanism. As stage previously, the Group is certified to the ISO 45001 Health and Safety Management System and monitoring to date has indicated adequate management of health and safety issues including identification of key risks, provision of appropriate training and protective equipment and monitoring of, and reporting on, incidents and accidents.
To address issues identified during due diligence and ESAP will be drafted and agreed with the Group prior to Board approval of the Project. The ESAP will focus on ensuring that the EIA is completed and approved, that construction activities are correctly managed, and that current approaches to pollution prevention, human resource and health & safety management are carried across into the new facility. The ESAP will be structured to ensure on-going compliance with the Bank's Performance Requirements and the Group will be required to provide annual reporting on the implementation of the ESAP.
Technical Cooperation and Grant Financing
The Project will have a Technical Cooperation (TC) component (corporate climate governance assessment to strengthen the Client's capacity to identify, assess and manage climate-related risks and opportunities) provided by the Clean Technology Fund (CTF) under its CTF High Impact Programme. In addition, the Japan-EBRD Technical Cooperation Fund will partially cover the legal due diligence costs associated to the Project.
Company Contact Information
Integrated Agrosystems FE
+38 0512 58 79 01
+38 0512 58 79 01
34 Prospect Myru, 54034, Mykolayiv, Ukraine
PSD last updated
09 Feb 2022
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