Intersport

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The EBRD is considering the provision of long-term debt of up to EUR 16.3 million to Sigur Retail Group, a limited liability company incorporated in the Republic of Slovenia. The proposed transaction involves debt financing alongside Polish Enterprise Fund VII, L.P. for the acquisition of 100% of Intersport ISI d.o.o. ("Intersport", the "Company") from Mercator d.d. as well as capex financing for retail expansion that will include the rollout of additional stores as well the development of the company's e-commerce business. 1. Market expansion, including strengthening of innovative retail channels (development of regional e-commerce). The transaction will enable further brand expansion of Intersport in Slovenia, Croatia and the Western Balkans via the opening stores in key locations, particularly where Intersport is under-represented (i.e. Serbia, Montenegro) as well as the improved management of existing stores. The key element of the expansion will be the development of e-commerce that at the moment remains underdeveloped. 2. Introduction of energy/resource efficiency in the e-commerce sector. The project has the potential to demonstrate innovative sustainability solutions in many aspects of the e-commerce operations, significantly beyond the current levels of the sector. Intersport can be a regional trend-setter in terms of sustainability in the key areas relevant to the cost structure in the e-commerce sector, i.e. warehousing, packaging and delivery. 3. Transfer and dispersion of skills / inclusion. Intersport will explore the introduction of a regional or country-based youth inclusion model as part of the company's expansion in Serbia, Croatia, Montenegro, and Albania, particularly focused on a training hub for managers, bespoke training for staff members on shop floors, and a career development programme for all staff for career progression and continuous learning. INTERSPORT ISI DOO Intersport is a Slovenian multi-brand sporting goods and sportswear retailer operating a network of 90 stores across Slovenia, Croatia, Serbia, Bosnia Herzegovina and Montenegro. Intersport also operates 8 franchised stores in Macedonia, Kosovo and Albania. Intersport was established in 1999 in a license agreement between Mercator d.d. and the Switzerland based Intersport International Corporation. Enterprise Investors Corporation ("EI", the "sponsor") is one of the largest private equity management firms in CEE, active since 1990. EI has raised eight funds with total capital exceeding EUR 2.0bn. These funds have invested EUR 1.7bn in 136 companies. EUR 45,300,000.00 Acquisition financing EUR 35,300,000 Capex financing EUR 5,000,000 Working capital financing EUR 5,000,000 This project was categorised B as the environmental and social risks associated with the acquisition and operation of a sports goods retailer are considered to be low to moderate in impact, site specific, and readily addressed through standard mitigation measures. Environmental and Social Due Diligence (ESDD) on this project was undertaken by staff from the Bank’s Environment and Sustainability Department, and included a review of the completed ESDD questionnaire, as well as review of the Phase I Environmental Due Diligence Review developed by a third party consultancy firm for Enterprise Investors as part of their acquisition audit procedures in August 2016. ESDD demonstrated that the Project is structured to comply with EBRD’s E&S Performance Requirements and EU Directives. Intersport’s parent company – Mercator – holds ISO 14001 certification, and Intersport as its subsidiary, implements some of the certification procedures, mainly related to fire safety and waste management. Intersport is a member of the Foreign Trade Association and a member of the Business Social Compliance Initiative (BSCI), through which it is committed to implementing the BSCI Code of Conduct throughout its supply chain. The assessment showed that Intersport has the capacity and resources to implement the Project in line with EBRD’s Environmental and Social Policy. Intersport employs about 350 people, of which 58 per cent are women. HR policies and procedures are in place and are all compliant with national legislation as well as ILO conventions. All premises (warehouse, administrative premises and stores) operated by Intersport are leased and did not involve any land acquisition or resettlement issues. The utilities including water supply, heat supply, electricity supply and wastewater discharge are covered by the lease agreements concluded with the owners of the properties, and are sourced by the municipality. The ESDD identified a few areas for improvement which have been added to the Environmental and Social Action Plan (ESAP), currently being negotiated with the Client, which include: formalising the current Environmental, Health and Safety and Social procedures into a documented management system, and the subsequent policies, management plans and trainings; include articles on collective bargaining and freedom to join worker’s organisations in the current HR policies; enhancing the employee grievance mechanism; developing and implementing a solid waste management plan and an emergency response in line with best practices. The Company will be monitored through the Bank’s review of the annual environmental and social reports completed by the Client. None. Michal Kedzia michal.kedzia@ei.com.pl +48224588500 +48 224 588 555 www.ei.com.pl Warsaw Financial Center, 31st Floor 53 Emilii Plater St. 00-113 Warsaw Poland