|
EBRD to help Danone improve central and east European food industry
The European Bank for Reconstruction and Development (EBRD) today signed its first "multi-project facility", a new form of financial cooperation, with Groupe Danone to support their investment programme in the food and beverage industry in eastern Europe and the former Soviet Union. The EBRD's facility for up to US$ 100 million will provide equity financing, on a partnership basis with Danone, in projects that will improve the quality and availability of food and beverages throughout the region.
Ron Freeman, First Vice President of the EBRD, said: "This project marks the launch of the EBRD's new "wholesale" approach toward industrial companies that have a strategic commitment to developing projects in our countries of operations. It is the industrial equivalent of our successful approach of working through financial intermediaries and widens the availability of EBRD debt and equity financing to its clients. Danone is an excellent partner for this approach: the company has already demonstrated its commitment to and ability to do business effectively in the region through two projects with the EBRD in the Czech Republic and Bulgaria and will be investing significant additional resources in the region over the next three years."
The equity facility of up to US$ 100 million for a period of three years will finance small and medium-sized projects involving the acquisition and modernisation of existing facilities or the construction of new ones in different subsectors of the food and beverage industry, such as the dairy and biscuit businesses. The EBRD will provide up to 35 per cent of total project costs alongside Danone and local partners. The project structure also provides an exit strategy for the Bank which will vary according to the circumstances.
The "multi-project" facility approach enables the EBRD to benefit from Danone's track record in identifying, appraising and operating successful food and beverage projects worldwide. In return for the EBRD's prompt availability of equity capital, Danone will provide its assessment of individual project viability, comprehensive due diligence and strong project operational support. The countries of operations will also benefit from this arrangement through shorter project preparation and approval procedures. In addition, the arrangement will allow the Bank to expand significantly its support for the food sector (which is characterised by the small size of its operations) in a cost-effective manner, while maintaining high credit quality.
The impact of the investment programme on countries' transition to market economies is significant: it will support the development of privatised food and beverage facilities and act as a catalyst for the restructuring and modernisation of essential parts of the food chain, such as primary production, packaging and distribution. It will also have a high demonstration effect with the production of high quality food and beverages for the domestic market and the development of locally sourced raw materials.
|
