Project Fes

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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 2014, the Board of Directors approved EBRD participation in a bond issuance programme for up to MAD 125 million (EUR 11 million) for the subscription, in MAD, to a privately placed bond issued by Zalagh Holding S.A. (the Company). Project Objectives The EBRD’s participation in the Company’s planned series of bond issuances were to enable the Company to finance a modernisation and expansion programme in Morocco, fund additional working capital needs related to this programme, and restructure its balance sheet.  Further, it presented an opportunity for a Moroccan corporate bond to receive a credit rating from an international ratings agency. Transition Impact The transaction impact of the transaction related to the demonstration effects of the transaction regarding new financing methods in the Moroccan corporate landscape, as it underlined the viability of corporate bonds as an alternative way of raising funds for new projects, thereby contributing to the development of the Moroccan debt capital market.  It also strengthened linkages between poultry farmers and consumers. Additionality By participating in the bond programme, the EBRD supported the Company’s issuance of one of the first corporate bonds in Morocco, and the first local currency bond to be subscribed by an IFI.  The EBRD’s visibility assisted in attraction of investors to this corporate bond issuance and in development of the local bond market (then small, and dominated by a small number of entities).  This was understood to have a strong signalling effect and help the Company to mobilise private funds for the subscription. Environmental and Social Summary The project was found to be Category B, as the Company’s activities were associated with a number of activities with potential environmental and social impacts.  The Company had complied with local law regarding pollution issues and assessment of potential impacts of a new facility, and had appointed employees qualified to consider environmental, health and safety issues at all of its facilities.  Best to ensure adherence to EU standards for animal welfare, the EBRD agreed an Environmental and Social Action Plan with the Company, which required submission of annual environmental and social reports to the EBRD regarding implementation of actions agreed with its IFI partners. Technical Cooperation Activities relating to the EBRD’s Advice for Agribusiness’ programme were contemplated for the project, to cover modernisation of business processes and upgrade of quality and environmental certifications.  The total cost of contemplated TCs, funded through the EU’s Neighbourhood Investment Facility (NIF) were anticipated to be EUR 65,000, a portion of which was to be incurred by the client.