DFF : AEI green bond

Location:

Lithuania

Project number:

53271

Business sector:

Energy

Notice type:

Private

Environmental category:

B

Approval date:

30 Nov 2021

Status:

Signed

PSD disclosed:

15 Dec 2021

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

An investment of €5 million in the green senior unsecured fixed coupon corporate bond issued by UAB Atsinaujinaniios Energetikos Investicijos (AEI), an investment fund incorporated in Lithuania

Project Objectives

The proceeds will be used to finance the development of wind projects located in Lithuania.

Transition Impact

ETI score: 65

Competitive: the transaction will support the development by the company of new renewable energy capacity in Lithuania. This new capacity will help increasing the share of private generation and will facilitate further competition in the energy market.

Green: the transaction is 100 per cent GET and will contribute to climate mitigation through the addition of new wind and solar energy capacity. The Bank's proceeds of €5 million are expected to contribute to the increase of a minimum of 46MW of wind capacity in Lithuania, which will generate at least 124.5 GWh of electricity per annum. contributing to 37.6 thousand tonnes of CO2 savings per annum.

This transaction is a novel way of financing renewable energy companies in the Baltic countries, as it allows to raise structurally subordinated debt at the holdco level.

Client Information

ATSINAUJINANCOS ENERGETIKOS INVESTICIJOS

UAB Atsinaujinaniios Energetikos Investicijos is a closed end investment fund incorporated in Lithuania with €60 million of capital raised to date. The fund is a regional renewable developer and independent power producer with an operating portfolio of 65.5MW of solar PV plants in Poland and a small 2.6MW solar PV plant in Lithuania and over 370MW solar and wind projects under development. AEI is managed by Lords LB Asset Management.

EBRD Finance Summary

EUR 5,000,000.00

The Transaction assumes an investment of €5 million in the senior unsecured, fixed coupon corporate green bond issued by AEI. The transaction represents 20 per cent of recently placed green bonds to be listed on the Nasdaq Vilnius Stock Exchange. This issuance is part of the larger €100 million green bond programme.

Total Project Cost

EUR 100,000,000.00

Additionality

Financing structure: the EBRD financing is expected to support a successful book-building process.

Resource mobilisation: the EBRD's involvement in a debt capital market transaction provides comfort to other investors and further widens market participation.

Environmental and Social Summary

Categorised B (2019). Medium-High risk rating. Given the capital market transactions restrictions the Environment and Social Due Diligence ("ESDD") was undertaken in-house and included review of the terms and conditions, the Issuer's Green Financing Framework, Secondary Party Opinion ("SPO") available at Company's website (www.lordslb.lt/AEI_green_bonds), replies to the EBRD Supply Chain Questionnaire as well as an assessment of the Company's corporate environmental & social management systems and the review of publicly available documents. The SPO issued by Sustainalytics stated that AEI Green Bond Framework is credible and impactful, and aligns to the four core components of the Green Bond Principle published by International Capital Market Association (June 2021). Sustainalytics is of the opinion that AEI has adequate measures to identify, manage and mitigate environmental and social risks commonly associated with the eligible projects funded by the proceeds.

The Bank's use of proceeds will be for new wind capacity in Lithuania. A desktop study review was undertaken of the three most advanced projects, including the review of available environmental statements submitted as part of permitting process. The in-house preliminary review of these documents concluded that the local Environmental Impact Assessment ("EIA") process has/is being undertaken in line with National and EU law, and none of the wind farms are located in sensitive areas, such as Natura 2000 or near to residential areas. The EIA studies do not indicate any material impact on protected habitats or bird migratory routes. The competent authorities have issued positive permits for the development of these wind farms.

As part of the ESDD the Bank reviewed the Company's corporate ESG management with a particular focus on supply chain risks associated with the sourcing of solar PV panels. Overall, the Company has the institutional capacity to implement the Banks Performance Requirements. The Company will address supply chain risks via an update of its existing procurement policy and the development of specific contractor due diligence procedures by the Company.

The Environmental and Social Action Plan ("ESAP") contains requirements to adhere to the EU guidance on due diligence for businesses to address the risk of forced labour in their operations and supply chains (2021) and seek third party audits of the solar panels suppliers when it becomes possible. Additionally, the ESAP requires future projects to be subject of environmental and social risk assessment in terms of renewable site sensitivities, e.g. protected areas such as Natura 2000 sites, and follow the EU EIA process. The ESAP also requires that any new project undertake location specific ecological and birds and bats surveys are undertaken notably for any new windfarms, to assess resident species risk, migratory and general bird related risk, and ensure adequate mitigation is featured as part of the project designs. The ESAP incorporates requirements for the future reporting and monitoring of the portfolio performance via sustainability and ESG reports made public, and the Company will apply the EU Corporate Sustainability Reporting Directive (including provision of climate risk information) as well as report in accordance to the EU Taxonomy in the future reporting.

Technical Cooperation and Grant Financing

None

Company Contact Information

Tomas Milasauskas
info@lordslb.lt
+370 5 261 94 70
https://lordslb.lt/en/fund/uab-atsinaujinancios-energetikos-investicijos/

PSD last updated

15 Dec 2021

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 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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