The EBRD, together with a commercial co-financing Egyptian bank, is considering providing a working capital loan of US$48 million to Medsofts Company Ltd (“Medsofts” or the “Company”). This operation will enable the Company to finance its growing working capital needs for the increased business activity, resulting from the completion of a new terminal investment in the Alexandria port in 2013.
EBRD supports an increased private sector involvement in the agricultural commodity sector in Egypt through providing financing to a successful local commodity import and distribution company, allowing a larger scale of operations and usage of its infrastructure capacity. This support has a substantial demonstration effect given the (historic and current) dominant involvement of the Egyptian government and state owned entities in this market, especially related to the import and processing of wheat used for the confection of subsidised bread. In addition, the Project will assist the Company through a technical assistance program in implementing the best international practices in terms of risk management.
Medsofts is a family owned company based in Egypt and is one of the key agricultural commodity (in particular corn, wheat, soybeans) importers and supply chain managers in Egypt.
A US$48 million working capital loan consisting of US$20 million provided by EBRD and US$28 million provided by the commercial co-financing Bank.
Categorised B. The project will help the Company by improving its corporate governance structure for risk management issues including those related to supply chain and sustainable resources procurement. Environmental and social risks associated with the project are site specific and appropriate mitigation measures have been identified.
Environmental and social due diligence (ESDD) comprised of: (i) a review of the Company’s profile and the existing environmental and social practices part of its operational cycle, (ii) interviews with the management and executive team, (iii) an Environmental and Social (E and S) audit of the corporate management practices to identify and assess any E and S risks that are associated with the Company’s operations, (iv) an analysis of potential environmental and social benefits, risks and issues associated with the Project; and (v) the development of an Environmental and Social Action Plan (‘ESAP’) based on the findings of the above investigation which will be covenanted in the loan documentation.
The ESDD verified that the Project is in compliance with the EBRD Performance Requirements (PRs), including EU environmental requirements, and that the Project will result in environmental and health benefits by securing basic grains to Egyptian citizens in accordance with EU food safety standards. The ESDD also ascertained that all procurement practices, supply chain management practices, Occupational Health and Safety (OHS) and labour working practices are in accordance with Egyptian local standards and also with GAFTA’s GTAS regulations which comprises compliance with HACCP principles and ISO22000.
Key actions and improvement measures included in the ESAP are:
(i) Development and operationalization of an integrated an environmental management system of Medsofts including capacity building programme for team members especially for those who manage the Company’s field-based sites and activities;
(ii) Comprehensive training/capacity building for operational staff who manage and operate Medsofts road transportation fleet, given severe situation of Egypt’s road safety; and
(iii) Establishment and also enforcing external, public and individual grievance mechanism of the Company’s operations.
The Company will provide the Bank with an annual environmental and social report including updates on the implementation status of the ESAP and notification of any material accidents or incidents. The Bank may also conduct monitoring visits on a risk driven basis, as deemed necessary, during the term of the loan.
Medsofts will benefit from TC funds to improve its corporate governance with regards to risk management.
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