MCS Spring

Location:

Mongolia

Project number:

50226

Business sector:

Agribusiness

Notice type:

Private

Environmental category:

B

Approval date:

28 Nov 2018

Status:

Disbursing

PSD disclosed:

17 Aug 2018

Translated version of this PSD: Mongolian

Project Description

Provision of a senior, long-term, A/B syndicated loan of up to USD 110 million to MCS Holding LLC, its fully-owned beverages subsidiary MCS Coca Cola LLC, and its fully-owned logistics subsidiary Total Distribution LLC.

Project Objectives

The EBRD funding will support i) construction of a new facility for production and bottling of natural mineral water in Mongolia, ii) expansion of logistical capabilities and improvement of efficiency for distribution of food and beverages to rural areas (by purchasing specialized long-distance delivery trucks and constructing warehouses around Mongolia), and iii) improvement in the capital structure by refinancing financial debt to extend its maturity.

Transition Impact

The transition impact of the project is expected to derive from its contribution to the integrated and competitive qualities. Through financing the investment program of MCS Coca Cola and Total Distribution, the Project will support i) launching of new natural mineral water product category, ii) initiation of exports (and diversification from currently only domestic sales) by selling natural mineral water in high growth and unsaturated markets in neighboring China and other East Asian countries, iii) expansion as well as improvement of efficiency of distribution of beverages and food (including perishable food) to rural areas in Mongolia.

Client Information

MCS COCA-COLA LLC

Established initially in 1993, MCS has gradually expanded to become one of the biggest business holdings in the private sector in Mongolia that conducts diversified activities across: beverages production and FMCG distribution; mobile telephony, broadband internet, and cable TV services; energy infrastructure services; property and hospitality development; mining; etc.

EBRD Finance Summary

USD 85,000,000.00

Senior long-term loan (to be provided as part of A/B syndicated loan of up to USD 110 million).

Total Project Cost

USD 119,300,000.00

Environmental and Social Summary

Categorized B (2014 ESP). MCS are well known to the Bank and have a record of implementing projects in line with the Bank's Performance Requirements. The environmental and social risks associated with the construction and operation of a mineral water bottling plant, and the operation of a logistics distribution network, are site specific and can be managed via the implementation of standard industry practices. Due diligence has commenced and detailed Q&A with the client has confirmed their capacity and capability to implement the Project in line with the Bank's Performance Requirements. Due diligence is however on-going in order to assess, and develop any related mitigants, with regard to the sourcing of natural mineral water and the sustainability of utilizing and maintaining such a resource, as well as the effectiveness of construction and contractor management procedures.

Technical Cooperation

None.

Company Contact Information

Enkhtuvshin Gombo
Enkhtuvshin.Go@mcs.mn
http://mcs.mn/eng
Sukhbaatar district 8, Central Tower, 15th floor, Ulaanbaatar 1420

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