Project 40: Kernal Group loan

complete

Project Description This PSD relates to a historical Bank project approved some years ago, and does not represent a new approval, or allocation of new funds.  Disclosure of this PSD was deferred in accordance with the transparency framework in place at the time, but due to an administrative oversight, was not subsequently disclosed In July 2014, the Board of Directors approved an unfunded risk participation in a revolving credit facility provided by a syndicate of banks to Inerco Trade S.A. (the Company), part of Kernel  Group  (“Kernel”), a  leading  vertically-integrated  agribusiness  group engaged in oilseed crushing, grain trading, crop farming, transhipment and  silo  services  operations in  Ukraine. The Bank’s participation comprised of USD 50 million. Project Objectives The EBRD’s participation in the transaction will allow the Company’s corporate group to secure sufficient working capital financing for its trading activity at the time of a difficult economic and political environment in Ukraine. Transition Impact The transition impact of the project is expected to derive from the client’s support of the Bank’s policy dialogue initiative to promote policies aiming at increasing efficiency in commodity markets in Ukraine as well as from setting standards of corporate governance.  The transaction will permit creation of frameworks for markets, and setting standards of corporate governance and business conduct. Additionality The Bank’s participation was highly additional and allow the client to complete the syndicate in the required amount and offer a diversification of its funding sources at a time when access to commercial funding on the terms offered was limited.  Further, the Project supported the principles of sound banking, and contributed to ongoing policy dialogue in the country. Environmental and Social Summary The project was assessed as Category B, and the Bank was focused on ensuring compliance with any and all national requirements for environment, health and safety, and labour management throughout the Company’s corporate group.  An Environmental and Social Action Plan was agreed, and the Company was required to report to the EBRD regularly on progress toward its implementation. Technical Cooperation None Implementation Summary The project was successfully implemented, allowing the Company to complete successful procurement of agricultural  crops, and their subsequent storage, transportation, transhipment, and sale.