The project consists of a US$ 3 million (€3.1 million) equity investment in one of the largest Ukrainian cereal breakfast producers, Boryspil Cereal Plant (BCP), to finance permanent working capital needs and the company’s growth.
The proceeds from the capital increase will enable BCP to:
- expand its operations,
- have access to much-needed working capital, and
- increase its marketing and sales in Ukraine and elsewhere in the Bank’s region of operations.
The transition impact and "demonstration effect" of the project are expected to be high, given:
- its support for a private sector company by strengthening market-oriented behaviour in Ukraine;
- the increase in consumers’ choice, both in quantity and quality of well-packaged branded products in line with Western standards.
BCP was acquired by Cerealia A.B. in February 2000. Cerealia AB is a Scandinavian breakfast cereal, flour and bread manufacturer with annual turnover of US$ 640 million. It is one of the largest Scandinavian food groups and the market leader in cereals products in the Nordic countries with a significant presence in the region.
US$ 3 million portage equity investment with a put option to the sponsor subject to a carve-out for specified political events.
The project was screened C/1, requiring an environmental audit. This was carried out by a member of the Bank’s Environmental Appraisal Unit in February 2000. The main findings from the audit were that:
the company complies with the Ukrainian national environmental, health and safety requirements as a minimum;
certain parameters, such as dust and noise levels or concentration of the suspended solids and heavy metals in water supplied to the plant for technical use, appear to exceed EU standards.
An Environmental Action Plan (EAP) formulated on the basis of the results of the audit, includes appropriate measures to address environmental issues. Implementation of the EAP will ensure that the company reaches compliance with the relevant EU standards. According to the audit, the company has not been subject to fines or penalties for non-compliance with health, safety and environmental regulations in the past. The company will report annually to the Bank on environmental matters, such as compliance status and progress with implementation of the EAP.
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