MCS Expansion

Location:

Mongolia

Project number:

50226

Business sector:

Agribusiness

Notice type:

Private

Environmental category:

B

Approval date:

08 Sep 2021

Status:

Passed Final Review, Pending Approval

PSD disclosed:

17 Aug 2018

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

Provision of senior, long-term, A/B syndicated loan of up to USD 101.8 million to MCS Group, its beverages subsidiary MCS Coca Cola LLC, and its 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 constructing warehouses around Mongolia), iii) improvement in the capital structure by refinancing financial debt to extend its maturity, and iv) increasement of the production capacity.

Transition Impact

ETI score: 62

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, and 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 83,400,000.00

Senior long-term loan (to be provided as part of A/B syndicated loan of up to USD 101.8 million).

Total Project Cost

USD 148,324,176.00

Additionality

The appetite for long-term financing by Mongolian commercial banks is limited or prohibitively expensive, even more so due to ongoing economic uncertainty related to Covid outbreak.

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 and Grant Financing

None

Company Contact Information

Enkhtuvshin Gombo
Enkhtuvshin.Go@mcs.mn
http://mcs.mn/eng
Shangri-La Ulaanbaatar Center 24th floor, Olympic street, Sukhbaatar District-1, Ulaanbaatar 14241, Mongolia

PSD last updated

22 Jul 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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