Project Cane equity

disbursing

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 On 22 July 2015, the Board of Directors approved an equity investment  of up to USD 100m for a subscription to newly issued shares representing a sizeable minority stake in United Sugar Company S.A.E. (“USCE” or the “Company”), an Egyptian sugar refining company majority owned by Savola group, a leading regional food conglomerate headquartered in Saudi Arabia. Project Objectives Proceeds from the EBRD subscription were used (i) for conversion of an existing EBRD loan to USCE into equity, and (ii) to finance the Company’s additional working capital needs.  The investment also permitted the Company to strengthen its balance sheet, decrease its foreign denominated loans, and finance working capital needs to assist in expansion of both local and export sales. Transition Impact The project’s transition impact stemmed from its contribution to increasing competitiveness, and to setting ambitious standards of corporate governance and business conduct.  Given the Company’s favourable cost structure and capacity to produce high quality sugar, its efficiency and capacity was anticipated to foster competition in the Egyptian sugar market.  Moreover, following policy dialogue with the EBRD, the Company also committed to improve its standards in relation to health and safety and environmental and social standards in accordance with an agreed Environmental and Social Action Plan (‘ESAP’). Additionality The Bank’s participation in the transaction was additional, particularly given the capacity to offer long-term financing in hard currency, not available in the local market at the time. The availability of these funds was expected to permit the Company to diversify its access to USD funding, and strengthen its capital structure. Environmental and Social Summary The project was appraised to be Category B, given the potential environmental and social impacts associated with production of sugar.  Due diligence on the transaction confirmed compliance with national legal requirements and the EBRD’s Performance Requirements. An ESAP was developed to ensure further improvements in environmental and social standards and adherence to EU requirements, on which the Company was required to report annually. Technical Cooperation None Implementation Summary The Client was able to increase its production capacity and reach a total production exceeding 800,000 tons per year, to become one of the leading producers and exporters in the Egyptian sugar market. The client remained in full compliance with the ESAP agreed with the Bank as part of the operation. Furthermore, the Bank’s involvement in the sector enhanced competition in the market, encouraging additional private sector players to enter the sugar market fostering competition for the benefit of consumers.