Atlantic Grupa - Serbia

complete

The EBRD is considering provision of an up to EUR 252 million loan to selected subsidiaries of Atlantic Grupa (“AG”), a leading regional food and beverage company, based in Croatia, Serbia and Slovenia. The EBRD will seek to syndicate EUR 192 million of the loan to commercial banks. In addition, the IFC will be providing an up to EUR 55 million senior loan on a parallel basis. Through this Project, the Bank will support the Company’s medium-term organic development, which is expected to contribute to the group's competitiveness in the region and thereby offering better quality and service to end customers. Furthermore, the transaction will further support regional trade and business development which is in line with the objectives of the Bank in the Western Balkans. Through mobilising substantial funding from commercial banks, with the Bank as a catalyst, the Project demonstrates confidence in AG, but more importantly in the region in these challenging times. The joint proceeds of the EBRD loan and IFC loan will be applied for: (i) up to EUR 272 million – balance sheet restructuring; (ii) EUR 25 million – working capital financing; and (iii) potentially up to EUR 10 millilon – energy efficiency improvements of AG operations. Through the proposed Project, the Bank aims to support AG in implementing additional key improvements in its corporate governance and business conduct, which, given AG’s size and prominence (second largest food and beverage producer in the region, with presence in all major countries in Western Balkans), should serve as a strong example for other regional companies in the areas of sustainable development and energy management. The project will help to set standards of corporate governance and business conduct, through: i) preparation of a detailed sustainability report in line with the Global Reporting Initiative standards; ii) introduction of a comprehensive Energy Management System; and iii) ISO 14001 for Environmental Management System AG is the second largest food and beverage producer and the leading FMCG distributor in SEE. It has a diverse portfolio of well-known FMCG brands such as Cockta, Smoki, Cedevita and Grand Kafa, which enjoy high brand recognition and a long-lasting tradition in the Western Balkans. Its key sales markets are Croatia, Serbia and Slovenia, while the Company also has production facilities in Bosnia & Herzegovina, FYR Macedonia and Germany. AG is also the exclusive regional distributor of leading third party brands such as Wrigley, Ferrero, Johnson & Johnson and others. In 2011 the Company had consolidated sales of EUR 628 million, with EBITDA of EUR 69 million. The Loan is part of an overall up to EUR 307 million financing package, consisting of: 1. Up to EUR 252 million EBRD senior syndicated Loan under an EBRD A/B loan structure, of which EBRD will seek to syndicate EUR 192 million to commercial banks; and 2. Up to EUR 55 million senior loan to be provided by IFC on a parallel basis. EUR 307 million Categorised B. Due diligence for this project included third-party reviews of both Droga Kolinska and AG facilities and was conducted in conjunction with specialists from the IFC. The Bank is familiar with the policies and procedures of AG through previous projects with the Company and specialists from the Bank’s Environment and Sustainability Department have visited both AG and DK facilities on a number of occasions. In general the sectors in which AG and its subsidiaries operate are not typically associated with significant environmental and social issues. AG has established an integrated quality system based on ISO 22,000 and 22002-1 requirements. Facilities within AG also maintain a range of international certifications (ISO 9001, 14001, GMP, HACCP) although the application of these is not consistent across facilities. AG intends to achieve a single certification for the group to IS0 14001 during 2014. Each AG subsidiary manages HR issues according to corporate and country regulations and procedures and there are written policies and procedures covering key HR issues. In terms of health and safety, each individual facility is likewise responsible for managing OHS issues. There is responsible staff at both the central and facility level and agreed internal regulations for workplace safety. Training is provided to staff commensurate with the tasks being performed and records on incidents and accidents are kept. There are a number of communication channels used by Atlantic Group for both internal communication with workers and external communications with customers and local communities. As part of project structuring an environmental and social action plan (ESAP) has been developed to ensure compliance of AG with both EBRD’s Performance Requirements and World Bank Group EHS Guidelines. The final ESAP will need to be agreed with the Company prior to Board submission of the project. The Company is required to provide annual environmental and social reporting on the implementation of the agreed ESAP. TC assistance is being provided through the Regional Energy Efficiency Programme, on a cost-sharing basis, for developing the Sustainability Report in line with GRI Application Level C+ and for the introduction of an advanced Energy Management System. Davor Orsic, Director, Treasury Atlantic Grupa Tel: +385 1 2413 943 Email: davor.orsic@atlanticgrupa.com Website: www.atlanticgrupa.com