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.
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.
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.
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
Senior long-term loan (to be provided as part of A/B syndicated loan of up to USD 101.8 million).
Total Project Cost
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
Company Contact Information
Shangri-La Ulaanbaatar Center 24th floor, Olympic street, Sukhbaatar District-1, Ulaanbaatar 14241, Mongolia
PSD last updated
22 Jul 2021
Further information regarding the EBRD’s approach to measuring transition impact is available here.
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