Astarta WC Support Loan

Location:

Ukraine

Project number:

50180

Business sector:

Agribusiness

Notice type:

Private

Environmental category:

C

Approval date:

02 Sep 2020

Status:

Passed Final Review, Pending Approval

PSD disclosed:

09 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

Original PSD

Provision of an additional  USD 10 million tranche to Astarta Group, one of the leading agricultural companies in Ukraine, creating additional liquidity cushion to mitigate a general risk of Ukrainian commercial banks reducing exposure to corporate clients during the COVID-19 crisis. This follows a senior secured long-term loan of up to USD 20 million to finance working capital approved by the EBRD Board on 18 July 2018.

Project Objectives

The loan will finance working capital needs of Astarta Group associated with its farming, sugar and soybean processing operations.

Transition Impact

ETI score: 61

 

The Transition Impact of the investment project builds on the Competitive and Inclusive transition qualities:

 -      Competitive: The project is expected to contribute to efficiency and productivity gains through the introduction of modern IT solutions and farming techniques (precision farming) as well as to support the strengthening of backward linkages to local suppliers and the improvement of their standards and their contractual terms.

 -      Inclusive: The project will also support Astarta Group to develop and implement cooperation programmes with local universities and schools, contributing to improved access to training and employment opportunities for young people. 

The additional USD 10 million tranche to finance working capital needs is expected to help ensure that the transition impact under the initial project remains achievable despite some delays and that it can be preserved.

Client Information

ZERNO-AGROTRADE LLC

Astarta Group is one of the largest vertically-integrated agricultural companies in Ukraine, operating eight sugar plants, around 230,000 hectares of leased arable land as well as dairy farms and engaged in soybean processing.

EBRD Finance Summary

USD 30,000,000.00

Total Project Cost

USD 252,000,000.00

Additionality

The EBRD financing is provided in the extraordinary circumstances of the Covid-19 crisis that have impacted the economy and limited new lending opportunities in the markets. During macroeconomic uncertainty some local banks can potentially suspend disbursements as most of the working capital lines are uncommitted and require annual renewals. The EBRD will provide committed two-year working capital financing as opposed to uncommitted short term working capital lines provided by commercial banks.

Environmental and Social Summary

Categorised C (2014 ESP). The environmental and social risks associated with the provision of working capital are not expected to be significant and do not require specific due diligence. Astarta's environmental and social impacts and corporate management systems are well known to the Bank from the five previous transactions and an audit of the company was carried out by independent consultants in September 2017 for the Astarta Grain transaction. The company is implementing the agreed ESAP and provides detailed annual environmental and social reports. http://www.ebrd.com/work-with-us/projects/psd/astarta-grain.html

Technical Cooperation and Grant Financing

The Project will have a Technical Cooperation (TC) component provided by the Japan-EBRD Cooperation Fund under the "Project Preparation Support Programme for Agribusiness Projects in Ukraine". The TC funds will partially cover the legal due diligence costs.

Company Contact Information

Mr. Viacheslav Chuk
office@astartakiev.com
+38 044 585 94 94
http://www.astartakiev.com/en/index.htm
04070, Kiev, Yaroslavska str., 58

PSD last updated

09 Jul 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.

Project Complaint Mechanism (PCM)

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 accountability mechanism.

The accountability mechanism 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 our webpage to find out how to submit a complaint through the confidential online form, by email, mail or telephone. We are available to discuss your concerns and answer any questions you may have about the submission or handling of complaints. Complainants’ identities may be kept confidential upon request.

Please note that after the appointment of the new mechanism Head in 2020, the revised Project Accountability Policy and Guidance will come into effect to guide case handling.

 

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