Project Viva: Yasar Holdings

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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 the Bank’s participation of up to USD 60 million in a Eurobond issue by Yasar Holding A.S. (Yasar), listed on the Irish Stock Exchange. Project Objectives The transaction contemplated refinancing of Yasar’s existing bond and a capital investment programme for its capacity expansion, including investments in a new dairy plant in Eastern Turkey. Transition Impact The transaction was expected to support achievement of transition objectives by contributing to: (i) market expansion through backward and forward linkages by establishing a greenfield plant in Eastern Turkey, leading to the need to source more milk from surrounding dairy farmers, allowing for small local producers to access formal market channels; (ii) skills transfer following the training of dairy farmers regarding production of milk to EU quality and productivity levels; and (iii) setting standards of corporate governance and business conduct, particularly regarding efficiency levels and water consumption reduction. Additionality The EBRD was invited to participate in the bond issue to enhance visibility and facilitate good market reception of the bond in a recovering market, and to allow Yasar to obtain longer tenor than was otherwise available in the market.  Moreover, the financing was anticipated to have a strong demonstration effect by contributing to the development of the capital markets and alternative sources of funding in Turkey, and allowed Yasar to increase its alternative sources of funding. Environmental and Social Summary The project was found to be Category B.  Due diligence confirmed that Yasar’s management of environmental and social issues was very effective, and ambitions on key environmental issues such as carbon reductions in water use and carbon footprint were identified.  Yasar Holding also produced an annual Sustainability Report which included data from all companies within the corporate group, and followed the GRI framework for reporting. Technical Cooperation n/a - none Implementation Summary This transaction focused on a combination of refinancing a bond previously issued by the Company in October 2010, and financing the expansion of capacity of the Company’s dairy plant in Sanliurfa.  Both the bond refinancing and dairy plant expansion were completed as envisaged. The Company remained in full compliance with the Environmental and Social Action Plan it had agreed with the Bank throughout the transaction, until redemption in April 2020. Moreover, the Bank’s involvement in the transaction positively impacted the development of both the local  capital market and the dairy sector, contributing to skills transfer (e.g. training to farmers) and reducing average water consumption and carbon dioxide footprint in respect of production.