Financing of the purchase of raw materials necessary to produce 45,000 metric tonnes of refined edible sunflower oil per year in Dnipropetrovsk, Ukraine. This project modifies earlier projects signed by the EBRD in December, 1995 and September 1997.
Loan proceeds from the project will be used for the purchase of sunflower seeds from local producers in Ukraine and refinancing an earlier preferred share issue.
The positive transition impact from the project stems from:
- private sector organisation of Ukrainian agriculture, where distribution and purchasing systems are still controlled by the state;
- knock-on benefits to the economy – from the company's expansion and exports;
- skills transfer from the sponsor, especially in new areas for the company, such as oil refining and bottling as well as establishment and marketing of the new brand;
- the positive demonstration effect as an example of successful private sector direct foreign investment in Ukraine (where per capita levels have been low relative to those in the Bank's other countries of operations).
Dnipropetrovsk Oil Extraction Plant (DOEP), a closed joint-stock company with foreign investment organised under the laws of Ukraine. The sponsor of the project is Eridania Beghin Say (EBS), a diversified agribusiness conglomerate food holding company organised under the laws of France.
A three-year revolving credit facility of US$ 35 million replacing the existing US$ 15 million facility. Also the Bank’s US$ 8.5 million existing preference share issue will be replaced by a US$ 8.5 million senior, subordinated debt issue maturing on 31 December 2002.
This operation involves the provision of additional financing to an existing Bank project at an edible oil processing plant. Environmental due diligence conducted on the existing project raised issues related to waste-water treatment and discharge, air emissions, fuel management and workers' health and safety, which led to the preparation and implementation by the company of an Environmental Action Plan agreed with the Bank.
The original investment had aimed at the construction of new facilities in line with western European standards and included provisions for the construction of a waste-water treatment plant. The project being proposed now would not have an impact on the environmental status or performance of the facility as it would simply provide working capital finance for the purchase of raw materials.
Detailed annual environmental reports have been reviewed since inception, which indicate full compliance with the Environmental Action Plan and with applicable regulations. The legal requirements for this project will ensure continued commitment by the company to implement the Environmental Action Plan, to report annually to the Bank on environment and health and safety and to provide immediate notification in case of accidents or incidents.
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