Tiryaki Trading

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Translated version of this PSD: Turkish The EBRD is considering proving USD 52.5 million term loan to Tiryaki - one of the leading players in the organic and conventional agricultural production and processing of pulses, grains, oil seeds and nuts in Turkey and in the surrounding region (incl. CIS, North Africa and Middle East). The facility will be used to finance the company’s working capital needs, in particular purchase and sale of pulses and grain commodities. The EBRD loan will come under the Syndicated Facility. When approved by the EBRD’s Board of Directors, specific transition impact objectives will be drawn primarily from the following areas: Promotion of good practices and organic farming in Turkey and CIS region. Tiryaki is one of the pioneers of the organic products market in Turkey. It received its first certified organic fields certificate in 2000 and since 2005 has also been working with organic farmers in the CIS region including one of the very few organic farming operations in Kazakhstan and Kyrgyzstan. With increased available funding, Tiryaki expects to increase its operations in these countries. Promotion of sustainable agriculture by reducing inefficiencies in the supply chain. Having the necessary logistical infrastructure, quality control, funding, sufficient storage and basic processing facilities, large local traders, like Tiryaki, are pivotal to the development of the primary agriculture in Turkey and CIS region, and presumably including parts of MENA. As such, unlike ordinary middlemen, companies like Tiryaki have a much greater stake in sustainable farming and are able to operate a business model that is based on a win-win relationship with the farmers, from whom it directly purchases its crops. The EBRD loan will effectively serve as the necessary bridge for connecting the Company and the respective farmers in Turkey and CIS on larger scale. Backward linkages. Tiryaki has an extended network of contracted farmers both for organic and conventional products. Sourcing raw materials directly from contracted farmers allow both better working capital and better quality control. Tiryaki intends to expand its direct purchases from farmers, and in doing so will disseminate the usage of elite quality seeds and modern chemical usage, raising output and increasing competition in the primary grain and pulses sector. Tiryaki, based in Gaziantep (South-East of Turkey) and operating in a key segment of the agri-business value chain, has been identified as a strategic prospective client for the Bank. The Company exports to more than 40 countries and is sourcing raw materials from more than 20 countries. The Company is 80% owned by the Tiryakioğlu family and 20% by the Gulf Growth Agro Fund of Investcorp, a private equity fund. Up to USD 52.5 million term loan. USD 175 million. Screening categories and rationale for classification Categorised B in accordance with the EBRD’s E&S Policy 2008: due diligence undertaken by EBRD specialists has confirmed that E&S impacts at the company's fixed assets are site specific and any residual risks have been addressed by way of an agreed action plan. Additional E&S risks in the supply chain are to be reviewed and assessed by the company as a result of EBRD’s involvement with the company. Information reviewed Due diligence comprised a site visit by EBRD specialists, management discussions and document review during August 2011. Environmental and Social issues Tiryaki is currently implementing a growth strategy and has ambitions to become an international operator in the food commodities sector. The company has evolved since founding in 1960s and company management has stated the ambition to meet international standards with regard to E&S stewardship across all company operations. Management of environmental and social risks has historically been regulatory driven and is partially governed by quality and food safety management systems. Formalisation of an E&S mission statement, policy and management systems certified to international standards is a logical next step in the company’s evolution and will address residual E&S risks identified during due diligence. Such issues include: achieving certification for appropriate E&S management systems; ensuring HR policies are consistent for all employees; reviewing H&S procedures on site; ensuring regulatory compliance is maintained; and taking a more proactive approach management of third party suppliers and contractors. EBRD does not expect this to be a significant challenge for the company when considering the scale of the operational risks and the current organisational capacity of the company. Environmental & social opportunities The company has the opportunity to review E&S management procedures to maximise energy and resource efficiency and to minimise operating impacts. Additional opportunities relate to the company’s involvement in regional climate change impact studies (with the assistance of EBRD) and reduction of labour and sustainability issues in the primary agricultural sector in Turkey and beyond. Summary of Environmental and Social Action Plan An environmental and social action plan has been developed and agreed with the company. The majority of the ESAP items reflect the ambition of the company to meet international standards while also satisfying the requirements of the EBRD’s E&S Policy. Minor capital costs are expected to be associated with the ESAP items and management of associated risks will have the added benefit of minimising the potential for E&S issues to impact business operation in supply chain, logistics and processing. The company has agreed through the ESAP to undertake a benchmarking exercise of existing operations and new facilities (at the appropriate time) against the applicable sections of the IPPC EU BREF note on Food, Drink and Milk Industries (2006) over the next 3-5 years. Furthermore the company is to commission a study into the potential risks associated with climate change, water scarcity and adverse weather conditions in the supply chain, logistics and processing. The ESAP also commits the company to identify and engage with company stakeholders regarding Project impacts and opportunities. None. Muge Artuk Treasury Manager PBX: +90 (216) 333 20 00 Fax: +90 (216) 3332020 E-mail: muge.a@tiryaki.net